Cape Town: African City of Opportunity How Cape Town Compares in This Special Edition of Cities of Opportunity, Pwc Builds on the Success Fig

Cape Town African City of Opportunity

www.pwc.co.za/cities Cape Town performs well in South Africa and the continent. Now it looks to the world.

Cities of Opportunity are more than just places of work or travel. To the millions of people who live in and visit them, they are the communities, people and stories that make up everyday life. In our view, the cities that will succeed in the future are those that can provide a balance between economic and physical security, nurtured aspiration and quality of life and environment.

Picture provided by The City of Cape Town This influx of people brings with The first question involves it an influx of human problems. organisational strategy, performance At the same time, cities like Cape and capabilities – and is the subject of Foreword Town are experiencing a wider set our Future Cities model – introduced of global megatrends. These include briefly on page 15. technological breakthroughs and social changes that transform the nature The second question forms the basis of work and the role of government, of this report, in which we have global economic shifts that require benchmarked Cape Town against cities to redefine themselves to compete the 30 cities featured in our seventh internationally, and climate change and annual report. These are global centres resource scarcity that threaten lives and of finance, commerce and culture livelihoods. The latter could hardly be and represent among them a sizeable illustrated more vividly than by Cape proportion of the world economy. But Town’s current water crisis. 2 Although Cities of Opportunity contends that ‘Day Zero’ is no longer expected in urban success means more than just 2018, the region is still suffering the spending power: It requires a balance worst drought in more than 300 years, of social, economic and environmental In 2008, the world’s urban and this may still make it the first major factors to provide the best quality of life population passed the 50% mark, city in the world to turn off the water for citizens. meaning that, for the first time, you taps. On current trends, it is unlikely to Our findings across the ten indicator were more likely to live in a city than be the last. areas describe a city with strong elsewhere. 1 But the megatrends also bring great fundamentals, aspiring talent and In the same year, in an attempt to opportunities to cities that can grasp a palpable excitement, set against a understand the characteristics that them. New ways of working empower backdrop of inequality, which is borne would help the growing cities of the staff, digital government engages out of the country’s past but which will future succeed, PwC launched its citizens and green technologies promise play a role in the city’s future. first Cities of Opportunity report. not only to fight climate change but Notable strengths include the city’s Ten years and seven editions later, to end many of the other downsides transport system, its business-friendly we turn our attention to one of of urbanisation; pollution, waste, environment, the cost of living and Africa’s great opportunities: The City congestion and issues of public health. doing business, and its natural beauty. of Cape Town. Implications for government, aside While urbanisation has so far lagged from the current water crisis, include behind in Africa, this cannot be said Cape Town is at a strengthening local, national, public of the continent’s most developed and private collaboration, fully country, South Africa, where 55% of crossroads between embracing digital technology and data, people now live in towns and metros, African problems and and building on the success of tourism. and their number grows by 2% every global ambitions. Its All of these areas will be explored year. future success will further in the following pages. 1 50.46%, see: World Urbanization depend on its ability We would like to extend our thanks to Prospects, United Nations to solve longstanding various individuals who engaged with Population Division (2008). us on this project, and provided us with problems at home their views on the city they live and while keeping up with a work in. Particular thanks must go to the City of Cape Town and the Western rapidly changing world. Cape Government whose insights have allowed us to present not only the city In order to succeed in a changing as it is today, but the detailed plans that world, Cape Town must understand its are currently being put into place to position relative to other global cities. build the city of tomorrow. This involves answering two questions: Cape Town has played an important • How do they do things? role in South African's history. We now look to the future of this African City of • How well do they do? Opportunity. 2 Note that the water crisis does not dominate this report’s findings. Although the fieldwork was carried out before the Jon Williams 2017-18 crisis, Cape Town did score poorly for Water-related business risk (27th of 31 Head of Cities & Urbanisation cities). However, this had limited effect on PwC Africa its overall ranking as the 66 scores in this study are equally weighted and no one factor outweighs another.

Contents

About the study 6

Future Cities 12

How Cape Town compares 18

Tools for a changing world 28

Quality of life 44

Economics 62

Implications 76

Acknowledgements 82

Appendices

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. About the study

6 PwC Cape Town – African city of opportunity 7 About the study

Cities of Opportunity

The first edition of the global Cities The measures we use are selected Transparency, simplicity, of Opportunity study was developed to develop an accurate reflection of consistency and balance in 2007 by PwC in collaboration with that balanced city. This shows the the Partnership for New York City. connection that exists between good Cities of Opportunity is based on The question which gave birth to this economic, social and environmental publicly available data supported by study was what New York had to do to indicators. Among the 10 indicators, extensive research, using three main remain competitive on the world stage five correlate in a close positive pattern sources: after the existential events of 9/11. – Intellectual capital and innovation; • Global multilateral development The purpose of this study continues Health, safety and security; Ease of doing organisations such as the World to be to comparatively measure the business; Technology readiness; and Bank and the International performance of a range of global cities Demographics and liveability. In other Monetary Fund; against a set of 10 indicators, which words, when one goes up, the others jointly provide a holistic view on how tend to do so as well. For example, the • National statistics organisations successful cities thrive in sustainable indicators from the 2011 global study such as UK National Statistics and urban development. found that health and intellectual Statistics SA; and capital correlated to a striking +87%. Like cities, the research itself continues • Commercial data providers. to evolve and the analysis has grown The 10 data indicator groups are based For the Cape Town study, this data was from the 11 cities included in the first on 66 variables which jointly provide collected in 2017, but in most cases, edition to the 30 cities covered today. an image of city success. In this robust it pertains to 2015 or 2016 to allow The group of global cities in the study sampling of variables, each individual for a fair comparison with the other is determined by three indicators: variable has to be: Relevant; consistent cities, the data for which was collected They are capital market centres, with across the sample; publicly available as part of the seventh global study in vibrant economies and a good quality and collectible; current; free of 2016. This means that some care should of life. Each year this set of cities is re- skewing from local nuances; and truly be taken in using the statistics in this assessed, with upcoming cities joining reflective of a city’s quality or power. report as current – some variables the ranks while those falling back in See Appendix A for an overview and change frequently and this report is a their development being removed. The definitions of the variables. snapshot in time. challenge of developing a city, keeping it on top and evolving with changing Data is normalised, where appropriate, The Cape Town study uses all of the 67 needs, is the dynamic we are seeking minimising the likelihood of a city indicators in the seventh global report to illuminate. The hypothesis for this doing well solely because of its size and bar one: Airport to CBD access. This global research is that the more well- historic strength. This is usually done variable, which was also not included balanced a city is socially, economically using land area, population or changes in the 2014 Into Africa study, compares and environmentally, the better it over time so that, for example, GDP airport access on the basis of rail links will fare for businesses, residents and growth is used rather than nominal rather than access to the city centre per visitors. GDP and affordability of rent is a se. proportion of local wages.

8 PwC In some cases, national data was used This global comparative assessment for Adjusting for income as a proxy for city data. This was only Cape Town is based on the land area done in cases where consistent, highly covered by the municipal authority, This study adds a new element reliable sources of publicly available stretching from Atlantis in the North- to the analysis, borne out of two city data were unavailable for all study West to Gordon’s Bay in the South- realisations: First, that the prosperity cities. The scoring methodology was East. The only exception to this is that of a country is a strong (though not developed to ensure transparency the University of Stellenbosch, which predictive) determinant of the success and simplicity for readers, as well as is included in the study rankings of its cities (see page 10). Second, that comparability across cities. The output despite being located in neighbouring benchmarking is most useful when it makes for a robust set of results and Stellenbosch municipality. The compares like with like. For this reason, a strong foundation for analysis and University and the city have close ties we report each of the indicators in this discussion. and it was judged that because many study using two sets of scores. The Cape Town residents commute to the first is versus all 30 other cities, and In attempting to score cities based on University and many graduates of the second against only the 12 cities relative performance, we decided at the Stellenbosch live and work in Cape which, like Cape Town, are situated in outset of our process that for maximum Town, it should be included. middle-income countries, as defined transparency and simplicity, we would by the World Bank. These are: Beijing, avoid giving overly complicated weights This study provides Cape Town the Bogotá, Jakarta, Johannesburg, Kuala to the 66 variables. opportunity to measure its performance Lumpur, Lagos, Mexico City, Moscow, against a set of comparator world cities Mumbai, Rio de Janeiro, São Paulo and Consequently, each one is treated with across the range of holistic indicators Shanghai. equal importance and weighted the and variables. How does the city rank same. For each individual variable, the amongst its peers, which areas are key This method also has its flaws – the 31 cities are sorted from the best to the to its success and in what areas does inclusion of China and Russia may not worst performing, with each receiving the city need to improve to compete be representative – but on the whole, a score ranging from 31 for best to 1 for globally as successfully as it competes the two groups represent two different worst. In ties, cities are assigned the in Africa? These are the questions this cohorts; the mean GDP per capita of the same score. This approach makes the study seeks to answer. 13 middle-income countries (MICCs) is study easily understandable and usable $6,400, seven times lower than that of by business leaders, academics, policy the richer 18.3 makers and the public alike. Once all of the 66 variables had been ranked and In addition, throughout the study, we scored, they were placed into their 10 have complemented our global rankings indicators (for example, Economic clout with a series of South Africa-only or Cost). analyses which compare Cape Town to the other metros in the country. Within each individual indicator group, This provides a view of the city within the variable scores were summed to the context of South Africa’s young produce an overall indicator score for democracy and the unique challenges that topic. Here as well, the city order it faces. from 31 to 1 is based on these scores, however, for ease of presentation, the cities scores are presented in reverse 3 MICCs mean = $6,446. High income order – i.e. rank. Therefore, if Paris country cities mean = $44,219. See: World receives a score of 31, it will be shown Bank data catalog, GDP per capita (current as 1 (first) in the tables and charts. US$, 2016), World Bank (2017).

The table at the start of each section also shows the summary score for the category.

This produced 10 indicator league tables that display the relative performance of the study cities from best performing to worst performing, and an overall table that shows all 10 indicators and the overall score.

Cape Town – African city of opportunity 9 Fig. 1 Distribution of study rankings per indicator with country income level highlighted

Overall Economic Ease of doing Cost City gateway Int. capital / Tech Transport / Health, Sustainability Demography / clout business innovation readiness infra security / environment liveability

Cape Town High-income countries Middle-income countries

Income drives success – but does capital is required to succeed. Indeed, Inequality of Opportunity not determine it education levels, health and safety outcomes and infrastructure all tend to The graph on page 11, shows the Figure 1 shows the rankings of all 31 be poorer in less developed countries, relationship between country income study cities, highlighting the income and their cities. This also makes Cape and study ranking in more detail. The category of their host countries, Town’s success in Transportation and y-axis shows cities’ overall score in 4 according to the World Bank. The infrastructure more laudable. this study, while the x-axis shows GDP results are striking. For the overall per capita. The first thing that can score, the 13 lowest ranked countries Scores for City gateway and be seen is the striking differences in are all middle-income countries, Sustainability and the natural income – the richest middle-income while the top 18 are high-income. A environment are slightly more nuanced, country, Malaysia, has a GDP per capita similar pattern is seen for Intellectual which highlights the fact that these of $9,500 compared with $26,500 in capital and innovation, Transportation are areas where developing country Spain, the lowest for the high-income and infrastructure and Health, safety cities can outperform the global leaders countries. and security and Economic clout – all due to factors – often geographical, or areas where significant long-term historical – that cannot be replicated. A strong correlation appears to be investment in physical and human observable between the two scores For example, Kuala Lumpur and (r2 = 77%). If this is the case, cities Johannesburg have airports that are that appear above the dotted line can 4 The World Bank recognises four income regional hubs, Moscow was designed be considered to have achieved a good groups – low, lower-middle, upper- middle and high. There are no low around its public parks, and Cape Town score in this study for their respective income countries in the study, and we has beaches and mountains which income levels, while those below the have grouped the lower-middle-income cannot be airlifted to London. line should perform better given their countries (India, Indonesia, Nigeria) with income levels.5 the upper middle ones (Brazil, China, This highlights a broader point. City Colombia, Malaysia, Mexico, South Africa) to show a middle-income group. indexes can be misunderstood when For the 2018 fiscal year, low-income they are used to create black and white economies are defined as those with a findings from colourful places. Instead 5 Please note that this is illustrative, not GNI per capita, calculated using the World cities should seek to understand the scientific, as it infers a linear relationship Bank Atlas method, of $1,005 or less in between the two variables which has not 2016; lower middle-income economies many parts that make up their unique been proven. are those with a GNI per capita between ‘place’ and to focus on the ones that are $1,006 and $3,955; upper middle-income most relevant and controllable. economies are those with a GNI per capita between $3,956 and $12,235; high-income economies are those with a GNI per capita of $12,236 or more. See: World Bank Country and Lending Groups, World Bank (2018). 10 PwC Is income everything

However, there are a multitude of factors that contribute to a Cities of Opportunity score and this box explores only one. In fact, our full global report found that the scores most strongly correlated with success were those pertaining to quality of life factors, as well as intellectual capital.6

In other words, to be a successful City of Opportunity, it is necessary to be highly productive, to attract the best people, and to look after them well.7

Throughout this study, we will report Cape Town’s rankings in two ways:

1. Compared with all cities; and 2. Compared with only the 13 middle- income-country cities (MICCs).

6 Cities of Opportunity 7, PwC (2016), pg.22.

7 GDP per capita, or output created per person, is a measure of prosperity but it is also a proxy for productivity which is normally calculated using total hours worked.

Fig. 2 Worlds apart

GDP per capita vs Cities of opportunity score

1600 Hong Kong Singapore London Amsterdam Toronto 1400 Paris New York Berlin Seoul Tokyo 1200 Madrid Sydney San Beijing Francisco Chicago Kuala Lumpur Dubai Moscow Stockholm Los Angeles 1000 Mexico City Milan Shanghai Cape Town 800 Johannesburg Bogotá São Paulo Mumbai Rio de Janeiro 600 Cities of opportunity overall score opportunity overall of Cities Jakarta 400

Lagos

200

0 10000 20000 30000 40000 50000 60000

$ GDP per capita, 2016

Cape Town – African city of opportunity 11 Future cities

12 PwC Cape Town – African city of opportunity 13 Future cities

How to meet the needs of changing citizens in a changing world

PwC’s Future Cities model asks how We recognise that each area forms part cities can meet the needs of changing of a city value chain with the ultimate citizens in a changing world. We outcome of citizen satisfaction, and consider the outcomes that make a that as well as being important on its successful city of the future, and the own, each of the areas interacts with strategies and capabilities cities must the others: Digital enables citizen- adopt to achieve these. centricity, finance must be transversal. In our experience, many cities have These include 10 areas, both traditional initiatives that focus on some or all of and modern, that should be high on these areas but few do this in a co- all cities’ agendas. Although some of ordinated way, and none that we know these may gain more press coverage, of benchmark themselves over time, or we do not view any one area as more against their peers to understand their important than another. Every city has readiness for the future. its own problems, culture, capacity and politics and these determine what will Who is responsible for change? work best. Our focus is primarily to help city Strategy to execution governments succeed, but there are few urban problems that can be solved Three of these areas involve re-thinking without the involvement of local strategy to change the way cities think, businesses, charities, communities, seven involve strengthening capabilities academics – and you and I. to enable cities to work better. Planning ambitious digital strategies and future resilience are important, but they must be grounded in the physical world of balance sheets, maintenance spending and technology implementations.

None of the 10 areas are unfamiliar, and even the least mature city will have elements of some or all of them, but in our experience many cities lack the capacity to perform highly in more than a few.

14 PwC Future cities

How to meet the needs of changing citizens in a changing world

Fig. 3 Future cities model

ed Serv alis ice on s rs Pe

Powers & Urban

Incentives Intelligence

n i

People & Digital l

a Culture City i b b

i a l i e t v y i L

Urban Data-led

Finance Delivery

& R Infrastructure & e & Transport th si w lie ro nce G

City Citizen City outcomes strategies capabilities Recognising how Changing how Enabling how cities succeed cities think cities work

Cape Town – African city of opportunity 15 City outcomes

Personalised Services Treat citizens like customers: Citizens have diverse and complex needs which vary with their life stage and circumstances. Service delivery must be both personalised and responsive. Example: Being able to see your bills online and up-to-date, or receiving an extra wheelie bin if you have a larger family

Resilience & Sustainability Plan for the worst: Ensure that when things go wrong, services can be maintained, people and assets protected, and resources preserved. Example: Contingency planning and up-to-date, independent risk surveys, or greenhouse gas and pollution controls that go beyond national limits Growth & Liveability Plan for the best: Build a city where people can live happy, healthy, productive lives, from cradle to grave. Example: Investing in education, skills and safe, cohesive communities; making the city a desirable place to invest, do business and trade with; helping people get around easily and ensuring equality of opportunity Citizen strategies

Citizen-centricity Put citizens at the heart of decisions – it’s a win-win: Example: Citizen engagement app, one phone number to reach any city department Transversal Management Break down departmental silos to achieve better cross-government outcomes Example: Combined departments for health and social care or housing, transport and land Collaboration Work with partners inside and outside of government to improve whole city outcomes Example: College courses that teach subjects needed by city employers; transport systems that are coordinated between different levels of government City capabilities

Powers & Incentives Use the fiscal, legislative and persuasive power of government to create change Example: Carpooling lanes, flexible water pricing, investment in large-scale inclusionary housing Data-led Delivery Use data to understand performance and actively drive delivery Example: Mayor’s dashboard with real-time tracking of key priorities Digital City Embrace ‘digital as default’ to reimagine government Example: ‘Smart streetlights’ that can help with parking, monitor air pollution and fight crime; Open data and ‘City as a platform’ mindset Urban Intelligence Solve complex city problems by revealing the answers hidden in data Example: Optimised transport routes and timetables, better matching of housing supply and demand People & Culture Create a working environment built on collaboration and fostering innovation Example: Flexible / remote working for city staff Infrastructure & Transport Build productive assets and connect people to opportunities Example: Fully integrated bus, rail, and taxi system with electronic ticketing Urban Finance Collect and use public money as efficiently as possible Example: Mature leveraging of large city-balance sheet to fund new transport investment

16 PwC “In education, it is our responsibility to equip our children to be active citizens in our economy, and provide much-needed skills to ensure that our learners are able to participate in the modern world.One of the ways that we as the WCG are equipping our young people is by improving e-Learning, which has been a priority for the WCED for over a decade. We have now accelerated it to make e-learning a reality in all schools.

We believe that e-learning holds a lot of potential to enable learning and teaching in a more differentiated way, and can also provide access to excellent quality resources in places where they are not currently accessible. It is also simply inconceivable to educate anyone in today’s world without making sure that they are ‘tech ready’ to enter the world of work when they leave school” Debbie Schäfer Minister of Education, Western Cape Government

Cape Town – African city of opportunity 17 How Cape Town compares

18 PwC Picture taken by Wessel Van Wyk

Cape Town – African city of opportunity 19 How Cape Town compares

Picture taken by Wessel Van Wyk

Overall

Score Total Intellectual capital and Technology readiness innovation

London 1 1500 1 1 2

Singapore 2 1417 2 12 1

Toronto 3 1407 3 4 6

Paris 4 1389 4 3 11

New York 5 1364 5 6 3

Amsterdam 6 1353 6 4 4

Stockholm 7 1345 7 9 4

San Francisco 8 1325 8 2 7

Hong Kong 9 1313 9 14 10

Berlin 10 1275 10 14 20

11 9 14 “...we often looked across Sydney 11 1273 Table Bay at the magnificent Seoul 12 1269 12 13 12 silhouette of Table Mountain. Los Angeles 13 1256 13 7 8

To us on Robben Island, Table Chicago 14 1245 14 11 13

Mountain was a beacon Tokyo 15 1244 15 8 8 of hope. It represented the Madrid 16 1197 16 21 17 mainland to which we knew we would one day return.” Dubai 17 1088 17 18 17 Milan 18 1006 18 20 21

Nelson Mandela Beijing 19 (1) 965 19 (1) 16 (1) 15 (1)

Kuala Lumpur 20 (2) 937 20 (2) 25 (7) 22 (4)

Shanghai 21 (3) 912 21 (3) 17 (2) 17 (3)

Moscow 21 (3) 912 21 (3) 19 (3) 16 (2)

Mexico City 23 (5) 838 23 (5) 23 (5) 26 (8)

Cape Town 24 (6) 803 24 (6) 22 (4) 29 (11)

Johannesburg 25 (7) 797 25 (7) 26 (8) 28 (10)

Bogotá 26 (8) 720 26 (8) 23 (5) 23 (5)

São Paulo 27 (9) 711 27 (9) 27 (9) 24 (6)

Rio de Janeiro 28 (10) 681 28 (10) 30 (12) 27 (9)

Mumbai 29 (11) 602 29 (11) 27 (9) 25 (7)

Jakarta 30 (12) 569 30 (12) 29 (11) 30 (12)

Lagos 31 (13) 328 31 (13) 31 (13) 31 (13)

High-income countries Cape Town Middle-income countries

20 PwC Picture taken by Wessel Van Wyk

City gateway Health, safety and Sustainability and the Demographics and Transportation and Economic clout Ease of doing business Cost security natural environment liveability infrastructure

1 8 13 3 8 1 3 27

6 6 21 17 1 9 1 12

18 2 3 7 11 13 4 3

2 10 7 1 8 8 6 27

7 16 15 1 7 2 7 26

11 7 5 6 16 10 13 16

22 4 2 10 3 10 5 19

20 12 8 5 5 4 13 19

4 11 18 11 13 13 2 15

15 4 5 8 4 26 12 5

19 3 1 13 8 6 15 16

10 13 4 15 14 18 8 14

16 15 14 4 20 19 9 4

17 16 11 9 5 19 11 8

3 1 16 12 19 17 16 25

12 9 9 14 12 5 17 9

8 18 30 18 2 13 21 6

21 13 9 23 17 16 18 24

5 (1) 23 (5) 23 (6) 22 (5) 24 (6) 3 (1) 25 (7) 31 (13)

13 (3) 25 (7) 27 (10) 25 (7) 18 (2) 12 (3) 9 (1) 7 (3)

14 (4) 24 (6) 12 (1) 19 (2) 22 (4) 24 (7) 24 (6) 29 (11)

9 (2) 20 (2) 24 (7) 21 (4) 24 (6) 7 (2) 28 (10) 30 (12)

26 (8) 19 (1) 22 (5) 16 (1) 23 (5) 21 (4) 22 (4) 18 (7)

29 (11) 21 (3) 17 (2) 30 (12) 14 (10) 28 (10) 18 (2) 2 (2)

24 (6) 22 (4) 20 (4) 27 (9) 28 (10) 24 (7) 20 (3) 1 (1)

30 (12) 30 (12) 26 (9) 26 (8) 26 (8) 30 (12) 23 (5) 10 (4)

23 (5) 25 (7) 25 (8) 24 (6) 26 (8) 28 (10) 26 (8) 12 (6)

27 (9) 28 (10) 19 (3) 20 (3) 21 (3) 31 (13) 27 (9) 23 (10)

28 (10) 29 (11) 28 (11) 28 (10) 29 (11) 21 (4) 29 (11) 19 (8)

25 (7) 25 (7) 31 (13) 29 (11) 30 (12) 23 (6) 30 (12) 11 (5)

31 (13) 31 (13) 28 (11) 31 (13) 31 (13) 27 (9) 31 (13) 22 (9)

Rank out of 31 cities (rank out of 13 middle income country cities, if applicable)

Cape Town – African city of opportunity 21 Cape Town: African City of Opportunity How Cape Town compares In this special edition of Cities of Opportunity, PwC builds on the success Fig. 4 Overall score (Middle-Income-Country City (MICC) score) of our latest global study and our 2014 publication Into Africa. Cape Town, the Top oldest city in South Africa, is the newest 14 (1) addition to our series. For this report, we used the scores of the 30 cities 17 (2) included in our latest (seventh) global study, and scored Cape Town against 18 (2) the same metrics. 2 (2) Although the city is old historically, it has only existed in its current political Middle form since 2000 when the seven 22 (4) administrative regions were merged to form a ‘Unicity’. This move was in 21 (3) keeping with a global trend towards city-devolution, putting Cape Town on Bottom 28 (10) a par with cities like London, which gained a powerful assembly in the same 29 (11) year.

However, unlike London, Cape Town’s 29 (11) new government inherited a disjointed system with poor finances, crumbling 30 (12) infrastructure and basic service delivery that was struggling to reach the people This table shows Cape Town’s scores for each of the 10 indicators relative to the that needed it most. Under these other 30 global cities. The score in brackets shows its score compared with the circumstances, the administration was 13 cities in middle-income countries unable to devote its full attention to solving the city’s many socioeconomic problems, such as unemployment, These strong fundamentals have These goals are symbolic of the context crime, drugs and illiteracy. allowed the city to pursue an agenda of in which many aspiring African cities socioeconomic development, embodied find themselves: Seventeen years later and the story is in the strategic pillars of its five-year one of comparative success. Revenue Integrated Development Plan (IDP): • How to find the balance between collection and capital budget spending creating economic opportunity are near 100% and the city is rated as • Opportunity City for those who can grasp it and extending the safety blanket of the having both the cleanest audit (by the • Safe City Auditor General) and the best service state to those who need it? delivery (by citizens) of any South • Well-run City African metro.8,9 • How to create a modern economy • Caring City with high paying jobs, when a large 8 General Report on the Local Government • Inclusive City number of the population cannot Audit Outcomes 2015-16, p. 8, Auditor- read or write? General South Africa. Cape Town was the only metro to receive a fully unqualified • How to convince people that audit opinion. education is their route to 9 The State of Basic Service Delivery in prosperity when their route to South Africa: In-Depth Analysis of the education is often unsafe and Community Survey 2016 Data, Statistics unfordable? South Africa (March 2017). Citizens were asked to rate the quality of overall service delivery for water, electricity, sewerage With such polarised needs and and refuse. The proportion of respondents ambitions, citizen-centric government saying “good” for each service was is a real challenge. highest, on average, for Cape Town. This study asks an important question: As urbanisation and global competition increase, how can African cities compete with the best in the world?

22 PwC With an unemployment rate 13 Does income drive success? Literature, its population as a whole percentage points lower than the remains uneducated, and while tourists national figure, and 10 points lower This study adds a new element to the can relax in its safe Waterfront areas than the average metro, Cape Town is a analysis, borne out of two realisations: (see page 48), city-wide crime statistics city of genuine opportunity for millions First, that the prosperity of a country reflect the dangerous daily lives of its of people. But the city’s ambitions go is a strong (though not prescriptive) many informal township dwellers.12 beyond South Africa, as evidenced by determinant of the success of its cities. Because Cities of Opportunity’s indicators are weighted towards its membership of some of the world’s Second, that benchmarking is most measures of the population as a whole, most influential urban forums, such as useful when it compares like with like. C40 Cities, 100 Resilient Cities and the Cape Town scores poorly in some areas Partnership for Healthy Cities.10 For this reason, we analyse each of that surprised the research team. the indicators throughout this report For example, many global ranking In order to compete on the global stage, using two sets of scores. The first score bodies rate Cape Town as both a global it is important to know where the city is versus all 30 other cities, and the tech hub and a city with unrivalled currently stands. This study aims to second against only the 12 other cities quality of life. The outsized number of answer that question by benchmarking which, like Cape Town, are situated in start-ups and venture capital firms and Cape Town against 30 of the world’s middle-income countries, as defined by the rate of house price inflation on the leading cities across 10 indicators of the World Bank (see page 10). urban success. These indicators are Atlantic seaboard are testament to this. grouped under three headings as Power, establishment and However, in all of these areas (Tech follows: inequality readiness, Intellectual capital and Tools for a changing world Overall, Cape Town comes 24th out innovation, Quality of life) Cape Town scores average or below because the • Intellectual capital and of all 31 cities, and sixth out of the indicators chosen reflect not only the innovation middle-income country cities (MICCs), behind Beijing, Kuala Lumpur, Moscow, well-educated graduates who live in • Technology readiness Shanghai and Mexico City – top in Green Point and work in the vibrant • City gateway Africa. tech sector. Metrics such as Percentage of population with higher education, Quality of life Its strongest scores are for Cost, Ease Maths/science skills, Health system • Health, safety and security of doing business, Transportation and performance, and Internet access in • Sustainability and the natural Infrastructure, and Sustainability schools are all areas where the rich and environment and the natural environment, with the poor experience life very differently. • Demographics and liveability moderate scores in Intellectual capital and innovation and Health, safety and Much of this is easily traceable to • Transportation and security. Areas for improvement include South Africa’s apartheid past – two infrastructure Economic clout, Technology readiness, tiered systems of education and Economics City gateway, and Demographics and health, for example, have a legacy • Economic clout liveability. that has proved hard to erase. Such entrenched problems cannot be solved • Ease of doing business While each of these scores has its own at the city level, but can be alleviated • Cost unique, underlying factors, there are with long-term collaborative action some themes that come through more These indicators, and their 66 from government, business and civil than once. More often than not, the underlying data points, have been society. Cape Town’s unemployment city’s areas of strength are those that refined over the past 10 years we rate – more than 10 points lower than it has been devolved more power to have conducted this study, but the the national level – demonstrates the control, while its areas of development central thesis behind them remains power of cities to lead the national fight often come down to one of two factors: the same: The more well-balanced against inequality. Global competition and, most notably, a city is socially, economically and inequality. Monopoly capitals environmentally, the better it will fare for businesses, residents and City of unequal opportunity? Although global economic shifts are visitors. a significant megatrend, the world’s South Africa remains the most unequal leading cities are still found mainly 10 Expanded definition of unemployment: country in the world, and though this in the 20th century’s centres of Cape Town: 23.4%, Average of 7 other is less pronounced in Cape Town, it global wealth – Europe and North metros: 33.1%, South Africa: 36.1%. See: remains very unequal by international Quarterly Labour Force Survey, fourth 11 Quarter 2017, Statistics South Africa standards (see page 56). Inequality (February 2018). means that even as Cape Town’s 12 Among others: Literature, JM Coetzee, universities produce Nobel Prize 2003 (UCT); Physiology and Medicine, AM winners in Chemistry, Medicine and Cormack, 1979 (UCT); Chemistry, Aaron Klug, 1982 (UCT).

11 Of countries with populations greater than 1m; some small islands may be more unequal. See: GINI Index (World Bank estimate), Development Research Group, World Bank (2011). Cape Town – African city of opportunity 23 America.13 This places Cape Town at some of these problems – Road safety, The city also benefits from a business- a disadvantage in certain catergories, Crime, Internet access in schools, but friendly regulatory environment and in particular City gateway and which are too recent to have affected low costs, ranking first for Cost of Demographics and liveability. the respective scores. Devolution is business occupancy. likely to continue in South Africa but In the latter category, many of the cities will only ever control a piece of Indeed, for Cost, Cape Town boasts a variables measure traditional cultural the jigsaw that determines outcomes much greater quality-of-life to cost- metrics. For example, the top three for their residents; for the rest they of-living ratio than all other global cities for Entertainment and attractions must collaborate. cities, bar Johannesburg, the difference are, predictably, London, Paris and between the two largely explained New York, whose museums and art The following section highlights some by the cost of housing. Expatriates galleries are world renowned. Cape of Cape Town’s top, middle and lower who move to the ‘Mother City’ can Town may be home to the continent’s scores. enjoy a quality of life afforded by few largest contemporary art museum, but other places in the world, a factor that this is always likely to be a threshold Top of the table increases the city’s scores in many other areas – for example, Relocation competency for the city, when Transportation and infrastructure is one attractiveness. compared to some of its more core of the city’s strongest areas, finishing offerings – beauty, nature, outdoor top among the MICCs and 14th in the Areas of good hope activities and wine. Cities need to global study – ahead of Amsterdam, understand their ‘whole place’ and Milan and Tokyo. Interestingly, the Cape Town is in the bottom third of some benchmark scores require less city’s best scores – for traffic and the global study but the top third of attention than others. commuting – are actually areas the city the MICCs for Intellectual capital and A low score for City gateway reflects and its citizens are most concerned innovation. Inequality dampens the Cape Town’s position in the world, with (see page 61). Rapid urbanisation city’s ability to compete in overall geographically and historically and limited space between an ocean levels of higher education and maths – excluding China, just eight of and mountains mean enabling people skills. Despite this, its world-class the world’s 50 busiest airports to get around is a competency that universities, a supply of well-educated are in middle-income countries.14 requires constant investment. Cape immigrants (see page 57), and a Nevertheless, this is an area where Town has largely achieved this so far, coalition of successful ventures – such many other middle-income cities are and has future plans that, if realised, as the Cape Innovation and Technology beginning to redefine themselves with will unlock transport as a way to Initiative (CiTi) – have allowed it to great success – albeit often as part of tackle the city’s structural and spatial become an innovation hub – with more Picture taken by Wessel Van Wyk a wider strategy built around their inequality. than 20 accelerator programmes and incubators. national carrier. Sustainability and the natural Power and control environment is another of Cape Town’s Health, safety and security is an area better scores, finishing 17th out of 31 where Cape Town does moderately, There are certain scores that a city and second among the MICCs. This will finishing 21st out of 31 and third administration cannot control at all come as no surprise to the millions of amongst the MICCs. The scores – such as demographics or Thermal annual visitors to the Western Cape’s describe a city that has a low comfort – but in most other areas nature reserves, mountains and blue macroeconomic, political and disease control will be shared between several flag beaches. For business, a host of risks, partly driven by the sound different stakeholders, including the green initiatives and job-creation governance of the city administration. different spheres of government (see programmes look set to build on Cape However, providing quality healthcare page 81). We find that in many areas Town’s status as a tech hub with new and personal safety to large numbers where the city government is largely green technologies and associated of the population remain development responsible – Transportation and industries. areas. infrastructure, Ease of doing business – it scores well. In areas where power is However the drought – the region’s shared and there is little collaboration worst in over 300 years – has brought – Health system performance, Crime – the city to the brink of turning off scores are lower. the taps, highlighting the need for serious investment in both supply However, in some cases the city has and demand measures. As the global collaborated well with other bodies climate continues to change, it is likely to improve scores – examples include that other cities will have much to World Top 100 airports and Ease of learn from Cape Town’s ongoing water entry. In other areas, this study has resilience project. uncovered collaborative initiatives that have recently been put in place to solve Ease of doing business is another top area for Cape Town, which reflects the strength of South Africa’s legal and tax 13 Megatrends, Issues, PwC UK, web page institutions, and which seems likely to (2018). Picture provided by The City of Cape Town be strengthened in the eyes of business 14 Worldwide Airport Traffic Report, Airports by the recent presidential election. Council International (2016). 24 PwC Picture taken by Wessel Van Wyk

“To the people of South Africa, the Table Mountain Range represents a great deal more than the rocky remains of millennia of sediment. It is of immense ecological, cultural, religious and economic significance not only to the Western Cape Region, but also to the rest of the country.” Nelson Mandela

Picture provided by The City of Cape Town

Cape Town – African city of opportunity 25 Warning signals This category places high value on These implications are aimed not cultural assets, in which many of the just at the City of Cape Town and Technology readiness is an area cities in this study excel. London’s the Western Cape Government. A where Cape Town’s low score belies National Gallery, one of many in the common theme in this report is the a rising trajectory and a real sense of city, welcomes three times more visitors need for collaboration and collective excitement. Technology is both a major per year than Cape Town’s International responsibility. Businesses and citizens area of success for the city within South Airport.19 The recent opening of the are as much responsible for – and have Africa – it is home to around 60% of biggest museum of contemporary much to gain from – a successful Cape all tech start-ups – and a key strategic art in Africa, will strengthen, but not Town. We set out ways in which each 15 focus area. Furthermore, the city was redefine, Cape Town’s place as a global of these groups can help to make that a recently named amongst just 22 “cities art and culture centre. reality in the coming years. at the forefront of global tech”.16 With national GDP per capita the fourth Its low score in this study can also be lowest in this study, it is little surprise Implications explained partly by low education that Cape Town comes third bottom for levels – for example, in ICT and software Economic clout, though this is not black • Make education and safety design – which may take time to rectify. and white. The city comes seventh top priorities, even though The city’s digital infrastructure, on the overall for Employment growth, while they are complex other hand, is rapidly changing: While a look at its Foreign-direct investment • Embrace technology and we were carrying out this study, a (FDI) reveals an area of huge potential. major rollout of internet across the city innovation and don’t be Cape Town’s FDI strategy was recently scared to experiment and in schools was underway. While voted in the top 25 in the world.20 this means that the city is likely to fare • Make resilience about better in future studies, it should be Opportunities for improvement more than water noted that other cities in this study may have also made similar investments in Studies like this are of minimal use if • Learn from the best what is a crucial area: they simply present a set of numbers. Instead, we have tried to present each • Build on the success of In the digital world, standing still is measure within its South African, tourism moving backwards. continental and global context, to give an understanding of why the city • Collaborate widely Cape Town’s low score for City gateway performs well or poorly and to make • Adopt citizen-centric is easier to explain – it is at the very tip recommendations for the future. Our government of Africa and Johannesburg’s airport is recommendations are based on the the established regional hub. But this findings of this global study, further • Embrace big data to solve is also an area of rapid recent growth: analysis of local data and also take into big problems Airport passenger numbers are up 24% account our Future Cities framework year on year and it has been voted ‘the (see page 15) which asks whether cities • Actively drive data-led best city in the world to visit’ by readers are set up to succeed. delivery of the UK Telegraph for the past three years running.17 • Attract and retain the best 19 Cape Town International Airport – people A low score in Demographics and Passenger Traffic, Airports.co.za liveability may raise eyebrows –Cape (September 2017). • Build on strong Town was recently voted Africa’s 20 Global Cities of the Future 2016/17 – foundations most liveable city (and can do little Winners, fDi intelligence (division of the to change its demographics).18 This Financial Times) December 2016 score is partly methodological; Cape Town’s high quality of life is derived from factors covered elsewhere in this study, for example the cost of living (Cost) and the beach and mountains (Sustainability and the natural environment).

15 Cape Town Tech Centre Infographic 2017, Silicon Cape Initiative (2017).

16 Tech Cities 2017, Savills World Research, web page: Savills world research/2017.

17 The World’s 50 greatest Cities – according to you, Travel Section, The Telegraph Online (29 August 2017).

18 The Top 10 Most Liveable Cities in Africa, Africa.com (2016)

26 PwC Cape Town has made significant Tourism is one of the pillars of the The real test of delivery is to progress in tackling one of the Western Cape economy, and grows successfully tackle the city’s most country’s most pressing problems – every year. The city must look to build longstanding and complex problems unemployment. Education and safety on the success of tourism by using – inequality, education and safety. are problems with similar roots in it as a shop-window for the wider Doing this will take considerable effort historical inequality. Solving these will economy. Collaboration between and wide collaboration across the many be as difficult as they are rewarding for government, business and citizens is responsible and affected groups, of both city and citizens. key and bodies such as Invest Cape Town which the city government is just one. and Accelerate Cape Town can help to At the same time, the city should coordinate this. In order to realise these opportunities, continue to embrace technology and the City of Cape Town must attract innovation, adopting a ‘digital by If it can be achieved, citizen-centric and retain the best people. As the default’ mindset which accepts that in government results in tailored, future of work changes, this means the digital world failure is often the first responsive services for each citizen, accommodating new, technology- step towards success. which improves satisfaction levels and driven ways of working and using data saves duplication and waste. Doing to help better match the needs of the Cape Town has embraced resilience as this would require significant data on organisation and the employee. a concept (employing a Chief Resilience Cape Town’s four million residents and Officer in 2017) but the city’s recent reliable, accessible communication At the same time, the city should water crisis has required a hard shift channels, both of which can be continue to build on its foundations from theory to reality. Resilience is achieved with digital channels like of urban finance, infrastructure and about more than just responding to citizen engagement apps. governance that have given it the strong physical threats such as drought (see platform it enjoys today. page 52). As the city draws up plans Data in government is important to to provide water in the long term, it Cape Town in two other ways. First, big should also be aware of and ready to data can be used to help government react to financial, economic and social find more efficient ways of delivering shocks. services, whether in improving refuse collection or housing waiting This study highlights innovative lists. Second, the administration can solutions from across the world to measure performance data to actively water shortages, recycling, citizen drive data-led delivery of its key engagement and many more. In an priorities, from opportunity creation ever-more connected world, Cape Town to water resilience and safe streets and should constantly look to learn from homes. the best cities in each of these areas. Its membership of bodies such as C40 Cities and 100 Resilient Cities will aid this.

“The Western Cape Government’s project to expose over 1,1million learners to a new way of teaching and learning by 2019 is a significant commitment to system-wide change strategy.

The eLearning Game Changer is delivering the infrastructure and technology required to support future- ready school leavers, but also focuses on developing willing and competent teachers to integrate quality digital content into the learning experience.

The impact of this holistic approach is closely monitored to ensure that this investment supports government’s desire for improved literacy and mathematics results, creating better opportunities for young people in the Province to succeed”

Penelope Tainton, Lead of eLearning and After School Game Changers, Western Cape Government

Cape Town – African city of opportunity 27 Tools for a changing world

In today’s ever-changing world, people, technology and information are cities’ most valuable assets. Success depends on the ability to nurture or attract the best talent and to create the right conditions for these ‘tools for a changing world’. We assess cities’ future readiness with three indicator groupings: Intellectual capital and innovation, Technology readiness and City gateway. 28 PwC Cape Town – African city of opportunity 29 Score

London 1 191

San Francisco 2 178

Paris 3 175

Toronto 4 172

Amsterdam 4 172

New York 6 164

Los Angeles 7 157

1. Intellectual Tokyo 8 155

Sydney 9 153 capital and Stockholm 9 153 Chicago 11 152

Singapore 12 142 innovation Seoul 13 141 Hong Kong 14 137

Berlin 14 137

One of the great benefits of graduates compared with 5.5% in Cape Beijing 16 (1) 113 urbanisation is increased productivity.21 Town.23 This is due not only to traditional Moscow 17 (2) 100 Cape Town scores moderately in economies of scale in production, Dubai 18 99 transportation and service provision, this study for Intellectual capital and 19 (3) 96 but also to knowledge spillover innovation, finishing 22nd out of the Shanghai effects – where ideas are shared and 31 global cities and fourth out of the 13 Milan 20 92 opportunities realised more quickly middle-income country cities (MICCs). Madrid 21 83 when people and companies physically The city’s best score is for Libraries with interact. Cape Town 22 (4) 74 public access, where it outperforms Mexico City 23 (5) 71 However, crowding alone does not global leaders such as Amsterdam, lead to better outcomes. In order to Tokyo and Toronto. It also scores well Bogotá 23 (5) 71 for Intellectual property (IP) protection, benefit, cities must have well-educated Kuala Lumpur 25 (7) 69 workers and an enabling culture.22 For which is measured at the country level those who succeed, these effects are and is testament to South Africa’s Johannesburg 26 (8) 54 robust legal institutions – particularly self-reinforcing – cities with high levels São Paulo 27 (9) 46 of Intellectual capital and innovation among developing countries. Mumbai 27 (9) 46 attract well-educated, innovative Start-up city people. Jakarta 29 (11) 43 Cape Town has become a hub for Being known as a knowledge economy Rio de Janeiro 30 (12) 42 incubators, start-ups and tech firms in hub is a huge advantage for cities. For Lagos 31 (13) 28 the past few years (see page 36), all of example, despite the UK’s vote to leave which depend on the protection of IP. High-income countries Cape Town the European Union, few commentators However, a poor score in the Innovation Middle-income countries think London will lose its place as the Cities Index and Entrepreneurial global centre of finance anytime soon. environment indicates that Cape rankings thanks to the reputation of the Much of this is due to the pool of talent Town still has some work to do in Universities of Cape Town (UCT) and at its disposal, and the pedigree of its 24 positioning itself as a global tech hub Stellenbosch. universities, which are hard for other when compared with cities such as San cities to recreate – more than 60% The Times ranked UCT 171st in the Francisco and Amsterdam. of London residents are university world for 2018, and fourth out of the A city’s Intellectual capital and BRICS/Emerging economies.25 21 The World Bank finds that a doubling of innovation score is driven by levels of city size increases productivity by 5%. education – both basic and higher. Of 24 The University of the Western Cape was See: Africa’s Cities: Opening Doors to the also added to the Times Higher Education World, World Bank (2017). the MICCs, Cape Town comes a close World University Rankings 2018, finishing second to Beijing for World University 102nd out of BRICS/Emerging economies, 22 This is hard to measure, but Glaeser finds but it was not ranked at the time of this that a 10% rise in the percentage of city research and does not affect Cape Town’s workers with a university degree in cities 23 See: Graduates in the UK Labour Market score. leads to a 22% rise in output. See Triumph 2013, Office of National Statistics (2013); of the City: How Our Greatest Invention and Community Survey 2016, Statistics Makes Us Richer, Smarter, Greener, South Africa (2016). 25 See: World University Rankings 2018, Healthier, and Happier, Glaeser (2012). Times Higher Education, (2018). 30 PwC Intellectual capital and Libraries with public Maths/science skills Percent of population World university Intellectual property Entrepreneurial Innovation Cities Index innovation access attainment* with higher education rankings protection* environment*

1 2 11 4 1 3 3 9

2 6 15 1 10 1 11 2

3 1 12 10 4 4 7 11

4 9 8 7 11 6 6 5

4 8 7 2 17 5 5 8

6 11 15 9 9 2 11 3

7 15 15 13 3 9 11 1

8 10 5 16 8 10 2 18

9 12 10 17 6 12 8 6

9 5 20 6 12 11 10 7

11 13 15 8 7 14 11 4

12 25 2 14 15 15 1 10

13 20 4 11 2 7 23 16

14 21 3 24 5 13 4 17

14 14 9 15 14 8 15 12

16 (1) 29 (11) 6 (2) 5 (2) 13 (1) 18 (2) 20 (5) 20 (3)

17 (2) 4 (2) 19 (3) 3 (1) 21 (4) 20 (3) 30 (12) 27 (9)

18 27 21 12 26 16 9 14

19 (3) 30 (12) 1 (1) 21 (5) 19 (3) 17 (1) 20 (5) 20 (3)

20 18 14 19 16 19 24 22

21 19 13 27 20 22 25 15

22 (4) 7 (3) 30 (12) 31 (13) 18 (2) 25 (7) 16 (1) 23 (5)

23 (5) 3 (1) 26 (8) 20 (4) 26 (9) 27 (9) 26 (8) 25 (7)

23 (5) 17 (5) 25 (7) 18 (3) 23 (6) 28 (10) 29 (11) 13 (1)

25 (7) 24 (8) 23 (5) 22 (6) 26 (9) 23 (5) 18 (3) 19 (2)

26 (8) 16 (4) 30 (12) 30 (12) 24 (7) 30 (12) 16 (1) 24 (6)

27 (9) 22 (6) 27 (9) 25 (8) 22 (5) 24 (6) 27 (9) 31 (13)

27 (9) 31 (13) 22 (4) 28 (10) 25 (8) 21 (4) 22 (7) 29 (11)

29 (11) 26 (9) 29 (11) 26 (9) 26 (9) 29 (11) 19 (4) 26 (8)

30 (12) 23 (7) 27 (9) 23 (7) 26 (9) 26 (8) 27 (9) 30 (12)

31 (13) 28 (10) 23 (5) 29 (11) 26 (9) 31 (13) 31 (13) 28 (10)

Rank out of 31 cities (rank out of 13 middle-income country cities, if applicable)

This contrasts markedly with basic Changing the game in education e-learning and after-school activities, as education. With just 5.5% of the well as an apprenticeships programme population educated to degree level or Without homegrown talent, cities must for those who have left school early. above, Cape Town comes bottom of all compete globally to be attractive. An cities for Percentage of population with analysis of education levels among Such a multipronged approach is higher education. This contrasts with its expats (see page 57) shows that Cape necessary, but long-term commitment record within South Africa where only Town does this better than any other will be key; although potentially Tshwane (7.1%) does better.26 city in South Africa, but it is still not transformative, education reform is enough to compete internationally. notoriously difficult to deliver. Neither will increased funding necessarily solve Recognising this, the Western Cape the problem: As a proportion of income, Government has made education Singapore spends around half as much its number one priority over the on education as South Africa, yet it coming years, with several major 26 Tshwane includes Pretoria, the ranks second in this study for Maths/ administrative capital. NB: Johannesburg ‘game changer’ initiatives underway, science skills attainment. Cape Town is on a par with Cape Town, at 5.5%. See: including broadband rollout in schools, ranks joint last (with Johannesburg). Community Survey Statistics South Africa (2016).

Cape Town – African city of opportunity 31 Score

Singapore 1 171

London 2 148

New York 3 146

Stockholm 4 142

Amsterdam 4 142

Toronto 6 132

San Francisco 7 130

2. Technology Tokyo 8 129

Los Angeles 8 129 readiness Hong Kong 10 128 Paris 11 127

Seoul 12 120

Chicago 13 116

Sydney 14 109

Beijing 15 (1) 101

Shanghai 16 (2) 98

As cities around the world announce attacks become more pernicious and Moscow 17 (3) 96 future bans on cars, the end of cities widespread, businesses in the city will connected by tarmac is in sight. This have to increase their investment in Madrid 17 96

contrasts with the ever-increasing cybersecurity to remain attractive. Dubai 17 96 importance of digital technology in Berlin 20 90 determining connectivity. Technology Globally, businesses are finding it more maturity and uptake by residents and more difficult to find experienced Milan 21 82 is an increasing driver of city cybersecurity professionals – some have 28 Kuala Lumpur 22 (4) 73 competitiveness. taken to employing robots. Although this study does not measure levels of Bogotá 23 (5) 69 Technology readiness comprises six cyber skills specifically, Cape Town São Paulo 24 (6) 66 indicators across two broad themes – scores poorly for its residents’ overall digital infrastructure and security and levels of ICT usage and for Software Mumbai 25 (7) 57

the digital readiness of citizens. development and multimedia. Mexico City 26 (8) 52

Although Cape Town scores relatively These scores may simply reflect broader Rio de Janeiro 27 (9) 41 poorly overall, there are many areas levels of education, which are low Johannesburg 28 (10) 38 of promise, starting with the City across the country. But they bely the administration’s ambitious vision, to fact that Cape Town is home to many Cape Town 29 (11) 35

be the ‘Digital gateway to Africa’ and of the continent’s most talented and Jakarta 30 (12) 23 its recent ranking in the 22 ‘cities at the successful tech entrepreneurs, with forefront of global tech’.27 a booming start-up sector and strong Lagos 31 (13) 14

universities. In order to achieve its High-income countries Cape Town A closer look shows that it has many digital vision, city government should Middle-income countries of the attributes required to make this strongly encourage the uptake of a reality in the coming years: A start- skills such as coding, cybersecurity parks, libraries, buses and elsewhere. up culture (see page 36), world-class and digital marketing by locals. This However, this research highlights the universities, venture capital firms – as will involve close collaboration with relative maturity of competitor cities’ well as plenty of good coffee shops. education providers and provincial digital networks: Cape Town’s scores government. for both Broadband quality and Mobile Digital readiness broadband speed are better than most Digital infrastructure One area of concern is Digital security. middle-income country cities (MICCs), but in the bottom quartile globally. With a largely English speaking Cape Town also lags behind in some population, European time zones areas of digital infrastructure. The A further example is Internet access and competitive wages, Cape Town city administration is well underway in schools. Enabling young people has become a leading destination for in rolling out 1,300km of fibre-optic to become ‘digital natives’ is key to business process outsourcing (BPO) cables, and providing free Wi-Fi in becoming a technology-ready city, yet in the past decade. However, as online Cape Town and Johannesburg both lag 28 See: With too few cyber experts, a firm behind the global leaders. The Western 27 See: Tech Cities 2017, Savills World proposes a bot to fill the gap, Steve leVine, Cape Government is close to completing Research (2017). Axios (1 November 2017).

32 PwC Internet access in Software development Technology readiness Broadband quality score Mobile broadband speed ICT Usage Digital security schools* and multi-media design

1 2 2 1 4 10 2

2 3 12 13 1 3 12

3 8 8 14 6 7 3

4 4 6 10 2 22 6

4 1 10 2 3 21 13

6 5 14 9 4 18 10

7 8 11 16 7 13 7

8 15 5 22 19 1 1

9 8 9 17 9 15 5

9 12 1 15 9 23 4

11 22 4 4 7 9 19

12 6 3 20 12 2 29

13 8 13 18 9 19 9

14 7 21 3 14 27 11

15 (1) 16 (2) 18 (4) 6 (1) 26 (8) 4 (1) 21 (4)

16 (2) 16 (2) 17 (3) 7 (2) 27 (9) 5 (2) 22 (5)

17 (3) 18 (4) 7 (1) 19 (3) 18 (2) 6 (3) 28 (11)

17 21 15 11 15 16 18

17 13 22 5 20 28 8

20 19 19 12 12 20 20

21 25 20 8 16 26 15

22 (4) 14 (1) 25 (7) 28 (10) 16 (1) 11 (5) 25 (8)

23 (5) 23 (6) 30 (12) 21 (4) 21 (3) 12 (6) 16 (2)

23 (6) 27 (9) 16 (2) 25 (7) 21 (3) 14 (7) 23 (6)

25 (7) 24 (7) 27 (9) 31 (13) 31 (13) 8 (4) 14 (1)

26 (8) 26 (8) 24 (6) 27 (9) 29 (11) 17 (8) 17 (3)

27 (9) 27 (9) 23 (5) 26 (8) 21 (3) 30 (12) 24 (7)

28 (10) 30 (12) 26 (8) 23 (5) 24 (6) 24 (9) 27 (10)

29 (11) 30 (12) 28 (10) 24 (6) 24 (6) 25 (10) 26 (9)

30 (12) 20 (5) 29 (11) 29 (11) 30 (12) 31 (13) 30 (12)

31 (13) 29 (11) 31 (13) 30 (12) 28 (10) 29 (11) 31 (13)

Rank out of 31 cities (rank out of 13 middle-income country cities, if applicable) an extensive rollout of internet to households had access although, in e-learning initiative also involves schools, but this was not in place when an indication of the pace of change, the creation of more than 5,000 tech this research was carried out. This is a this had increased to 53% by 2016.30,31 enabled classrooms, an e-learning stark reminder of how fast technology Among the MICCs, Kuala Lumpur has curriculum and teacher training courses changes: There is no ‘end-goal’ for had 4G access in most of its schools that focus on the integration of ICT into technological progress. for many years, and is in the process of teaching and learning. This coordinated upgrading these connections to speeds approach gives Cape Town the potential Leapfrog or catch up? of 15Mbps or more. to ‘leapfrog’ developed cities by In 2011, Amsterdam had the highest harnessing the new technologies of the Connectivity is only the beginning Fourth Industrial Revolution.32 proportion of household with internet of technology’s power to transform 29 access in Europe, at 94%. In the education. The Western Cape’s same year, just 35% of South African 30 National Census 2011, Statistics South 29 The Netherlands leads Europe in Africa (2011). household Internet access, Carly Blair, I 32 Enabling a sustainable Fourth Industrial Am Expat (20 June 2012). 31 General Household Survey 2016, Statistics Revolution, PwC, G20 Insights, (May, South Africa (2016). 2017). Cape Town – African city of opportunity 33 Picture taken by Wessel Van Wyk

Learning to innovate Smart city?

Technology and innovation go hand Innovation involves finding creative in hand. As important as digital solutions to seemingly unsolvable infrastructure and skills is the culture problems. Modern African cities are full that accompanies them. Innovation of such problems, from inequality and was previously considered an innate transport, to housing, employment and quality, but increasingly companies and security. More than perhaps any other governments are learning that it can be city, Cape Town sits at a crossroads taught. Many modern cities are home to between African problems and digital Accelerator, Incubator and Innovation- solutions – the reason it was recently as-a-service programmes, all of which chosen as the headquarters of the aim to increase innovation in different continent’s first EdTech incubator, areas of a city economy. Some focus on Injini. Innovators and policymakers existing firms – ‘teaching businesses should seize the opportunity to make to innovate’ while others are aimed Cape Town the test bed for the African at start-ups – ‘teaching innovators smart city solutions of tomorrow. about business’. Many cities are now launching innovation programmes or incubators of their own.

Cape Town is home to more of these programmes than anywhere else on the continent. The Cape Innovation and Technology Initiative (CiTi) was formed Picture taken by Wessel Van Wyk in 1999 and more than 20 others (including PwC) have followed since. Global incubator Startupbootcamp launched its first programme on the continent in September 2017 in Cape Town.33 The following month, it became the first African city to be labelled a Unesco ‘City of Design’.34

33 Our Top African Innovators arrive in Cape Town, Heinich Tessendorf, Startupbootcamp, (4 September 2017).

34 Cape Town is the first city in Africa to be named a UNESCO City of Design, DesignIndaba.com (14 Nov 2017).

34 PwC “I believe Cape Town has inherent competitive advantages to make it an EdTech innovation centre for the world. It has a timezone, talent pool and cost base to buttress any tech industry; but a concentration of great universities and global education companies that make it the education capital of Africa. This is augmented by an urgent pan- African demand for improved education that makes EdTech innovation not just crucial to Cape town as a hub, but crucial to the future of the whole country and entire continent.”

Jamie Martin, Head CiTi EdTech cluster, Co-founder of Injini, Africa’s first EdTech incubator

Picture taken by Wessel Van Wyk

Cape Town – African city of opportunity 35 Box 1 Start-ups in Cape Town

Cape Town is fast becoming Africa’s digital start-up hub: The city boasts more than 25 co-working spaces and 20 acceleration programmes – each of which supports between 10 and 15 start-ups annually.35 Global and local African entrepreneurs are choosing Cape Town for many reasons including its access to the African market, access to funding, a culture of innovation, tax incentives and a lifestyle and natural beauty that are hard to match.

Cape Town’s innovation community is thriving. With over 60% of South Africa’s total tech start-ups and 58% of its venture capital firms headquartered in the city. Such companies represent FinTech, EdTech, TravelTech, e-commerce, AgriTech, gaming, HealthTech and more.36

These innovations are filling essential gaps for citizens and transforming the way people live in the city. Many were formed in response to the city’s complex social and economic problems, as highlighted below.

Helping small businesses grow Providing quality education at Helping people to move around low cost the city

Snapscan GetSmarter GoMetro Provides a cardless and cashless Provides world-class online education A smart mobility company helping payment method for over 40,000 courses to + 50,000 learners. The cities generate accurate transport South African merchants for easy and company democratises education data for both formal and informal safe payments. Snapscan has also by giving working professionals sectors, providing on-demand partnered with the Street Parking access to courses by world-renowned mobility solutions, and journey- Solutions to provide motorists the institutions like the University planning applications with live ability to pay parking marshals in of Cambridge, the University of updates and schedules to more than cities via the app. Chicago, HarvardX and the University 25,000 people in seven cities in South of Oxford Said Business School. Africa.

Greenfingers Mobile School in a Box Jumpin Rides A mobile technology platform which Run by the Social Project, it provides Allows commuters in South Africa to manages and finances smallholder an educational pack of gamified, offer a ride to commuters going the farmers, reducing transaction costs interactive courses for up to 100 same way or find a ride. Carpooling and enabling efficient access to children from Grade 1 to Matric in reduces costs and congestion, and global value chains with the aim English, maths, science and IT. It the platform verifies users and allows of improving food security and provides the necessary hardware, them to rate one another. alleviating poverty in rural Africa. including devices, and content to run the lessons.

SweepSouth Paper Video WhereIsMyTransport An online home cleaning service, Offers free online video tutorials Has completed the first ever data matching domestic workers to work linked by QR codes to exam past- collection project for informally run in their local area. They recruit a paper questions to help students to public transport in all South Africa’s large portfolio of domestic cleaners in study before their final exams from major cities, allowing organisations South Africa, who are provided with Grades 8 to 12. Over 11,000 video to access unique information a guaranteed minimum hourly rate tutorials are available, making it inclusive of journey time, fares and and transport costs. Users can rate South Africa’s largest collection of frequency. cleaners afterwards. education videos, which can also be watched offline using micro SD cards.

35 City-led development is the answer to South Africa’s jobs crisis, Democratic Alliance (da.org.za) (29 Aug 2017).

3636 PwCCape Town Tech Centre Infographic 2017, Silicon Cape Initiative (2017). Box 2 Digital cities

Why now?

Although ‘digital’ technology has been around for years, in the last decade or so, several trends have collided at once: • Fast, cheap data; • An alignment of hardware and software standards; • Access to consumers and citizens via smartphone; and • A willingness to share open data and open source technology. All of these trends have made barriers to entry lower, which has, in turn, transformed the technology world from one of big, corporate IT and engineering firms, to a jungle of college-dorm room start-ups and ‘unicorns’. This is good news for cities in two ways: • First, because many of the most exciting new solutions have the potential to solve big, longstanding urban problems like housing, transport and resource scarcity; and • Second, because such commoditisation means increased speciality and better value for money – in short, less supplier power. But the scale of change will bring both threats and opportunities to cities.

Fig. 6 Digital cities: The future Digital is one of the key focus areas set out in our Future Cities model (see page 15). Digital is sometimes thought about as just hardware and software – and both are crucial. But its transformative nature means that it also affects Digital the city in much wider ways. We recognise four strategy crucial areas that should form the basis of any Digital / Smart City business case. Digital Digital city Doing Digital solutions business

Digital organisation

“Cape Town provides an incredible home for the innovation ecosystem for Africa. The beauty of the city and its people is matched with the energy and creativity of entrepreneurship. At Startupbootcamp, we are thrilled to call Cape Town our home in Africa as we attract talent and nurture ideas into exciting businesses. Cape Town’s infrastructure is world class and it is a diverse and truly global city”

Paul Nel, StartupBootcamp

Cape Town – African city of opportunity 37 Box 2 Digital cities

Continued

Digital strategy Doing digital business Digital organisation

Digital can help the city achieve its Benefiting from new technologies Cities can become more productive existing goal of improving citizens’ requires cities to change their and more innovative organisations by lives through: traditional business models: embracing digital tools and modern ways of working: • Efficiency & improvement – • City as a buyer – cities will getting better value for money in still procure technology, but • Collaborative digital tools everything from more efficient in a best-of-breed approach – such as real-time editable city admin functions to optimised that will require more flexible documents and mobile-ready fleet-maintenance regimes, and procurement to ensure better spreadsheets that ensure staff can personalised services that avoid value for taxpayers’ money. actively collaborate whenever and waste. wherever. • City as a regulator – • Engagement & inclusion – using transformative tech trends • Ways of working – such as virtual user-friendly digital platforms, such as Airbnb and Uber create teams, flexible working and a crowdsourcing ideas, or finding winners and losers – cities relaxed corporate culture and new ways to gather data to help must understand these trends dress code. the city better understand its and regulate where unfairness • Physical space - evidence shows citizens. This can both improve exceeds economic gains. that our physical surroundings service delivery across the • City as a platform – many apps affect our creativity – ‘innovation board and plug the gaps that use city data to provide services to zones’ and other interior revamps the vulnerable most often fall users for free – particularly real- can help. through. time transport apps. Their success • Mental frameworks – often the • Trust – simultaneously opening depends on cities being willing to human mind must be encouraged up government data and securing embrace open data and the ability to innovate, using frameworks its systems to increase innovation to govern the data environment such as ‘design thinking’. and trust. Using e-controls, big to ensure common standards and data transactions analysis and practices. • Innovation as a department blockchain to tackle fraud and – many cities have set up cross- • City as a service provider – new corruption. government departments to technology will give citizens and instill innovation, and even Chief • Economy & Environment private firms the ability to offer Innovation Officers. – growing the local economy traditional city services – such through government demand as electricity and recycling – for • Open data and open innovation for services, new digital less. Cities must adapt or face – encouraging anyone who is infrastructure, skills and irrelevance. interested to contribute to city innovation, and the investment goals, making financial and these encourage. Reducing operational city data freely pollution and greenhouse gases available online, and running with green energy and more open events such as ‘hackathons’ efficient technology. to solve important problems.

38 PwC Box 2 Digital Cities

Continued

Digital solutions

Many emerging technologies will have the biggest effect on urban environments. PwC’s ‘essential eight’ recognise the ones that will have the greatest effect in the coming years.

Technology Description Potential uses in cities

1. Internet of A network of physical objects embedded with Sensors on buses to assist with transport analytics, Things (IoT) sensors, software, network connectivity, and optimisation and fleet management; Water meters computing capability that analyse usage inefficiencies and pipes that sense low pressure and leaks; Smart poles that act as energy-saving streetlights and are embedded with sensors that can show granular spatial data of air pollution, noise levels, traffic or any other sense- able phenomenon.

2. Augmented Visual and/or audio ‘overlay’ on the physical Apps to help citizens get around; Virtual street signs reality world or bus stops; Architecture and planning that can be overlaid on existing city structures.

3. Virtual A completely computer-generated simulation Reimagined simulation of greenfield urban reality of a three dimensional environment where planning and architecture; Citizen experience anything is possible simulators in new modes of transport.

4. Blockchain A ‘distributed ledger’ which takes cybersecurity Unbreakable security for storing citizen data, to the next level and can eliminate fraud increasing trust and engagement in and with the city.

5. Artificial Software algorithms that automate complex Analysing big citizen data to inform the most intelligence decision-making tasks, improving human effective, popular revenue raising measures; outcomes Optimisation of transport routes based on supply and demand in real time.

6. Drones & Unmanned vehicles or robots that can sense Surveying hard to reach places such as telephone autonomous and survey and can carry data or goods where masts or the seabed in ports; Aerial mapping for vehicles other methods are impractical or costly, or can urban planning; Nano-drones that can flow through transport people or freight more safely and water pipes and sense - or fix - leaks; Security conveniently than traditional methods surveillance.

7. 3D printing Creates three-dimensional objects based Create replacement parts for vehicles with no on digital models by layering or ‘printing’ delay; provide cheap and easy building materials successive layers of materials for informal settlements.

8. Robots & Machines (or programmes) with enhanced Unpopular tasks such as cleaning streets, beaches, robotic sensing, control, and intelligence used to oceans and sewers; RPA can automate back-end process automate, augment, or assist human activities. tasks, reducing human error (e.g. lost utility bills) automation Robotic process automation (RPA) automates making cities run much more efficiently. (RPA) human processes on computers.

Cape Town – African city of opportunity 39 Score

London 1 176

Paris 2 155

Tokyo 3 147

Hong Kong 4 143

Beijing 5 (1) 141

Singapore 6 140

New York 7 136

3. City gateway Dubai 8 135

Shanghai 9 (2) 132

Seoul 10 127

Amsterdam 11 124

Madrid 12 120

Kuala Lumpur 13 (3) 114

Moscow 14 (4) 110

Berlin 15 105 Welcoming the world This is having marked success. Cape Los Angeles 16 93 Town has added ten new direct Positioned at the very tip of Africa, international routes in the past two Chicago 17 90 thousands of miles away from the huge years, including Frankfurt, Istanbul and Toronto 18 88 consumer markets of Europe and North Vienna, as well as two more flights on America, Cape Town has challenges the highly popular route to London.38 Sydney 19 77 to overcome in the City gateway San Francisco 20 76 variable – a reminder of the natural This has seen rapid passenger growth and geographic constraints faced in of 24% over the past two years, Milan 21 75 39 competing as a City of Opportunity. compared to 2% for OR Tambo. Stockholm 22 70

This can be seen in low scores for Numbers aside, Cape Town’s airport São Paulo 23 (5) 68 Airport connectivity, Incoming/outgoing is one of the best performers in Top Johannesburg 24 (6) 59 passenger flows, and International 100 World Airports, beating such cities tourist numbers. as San Francisco, Madrid and Dubai. Jakarta 25 (7) 58

In 2017 it was voted Africa’s leading Mexico City 26 (8) 56 While Cape Town’s International airport in the World Travel Awards.40 Airport serves around two million Rio de Janeiro 27 (9) 52 passengers a year, London (ranked top Tourism is taking off Mumbai 28 (10) 44 for City gateway) serves 163 million.37 Cape Town also scores lower than In the same awards, the City of Cape Cape Town 29 (11) 41 Town also received the award for Johannesburg, whose OR Tambo Bogotá 30 (12) 31 41 International Airport serves four Africa’s Leading City Destination. Lagos 31 (13) 15 times as many passengers, and around However, the city’s appeal extends well beyond Africa, as evident in its higher three times more international routes. High-income countries Cape Town However, it should be noted that these score for International association Middle-income countries figures do not account for the many meetings. The city’s convention centre passengers that stop over at OR Tambo was proactive in taking advantage of on their way to Cape Town, in particular the city’s showcasing during the 2010 world’s best tourism destination by those from the United States, from FIFA World Cup. In the intervening TripAdvisor42, and again in 2014, by the where there is no direct flight. years, Cape Town’s international New York Times.43 It has been voted the reputation has gone from strength ‘best city in the world to visit’ by readers In response to this, the Western Cape to strength. In 2011 it was voted the of the UK Telegraph for the past three government has created an AirAccess years.44 team to focus on route expansion. 38 Route Expansions for Cape Town, AirAccess, Wesgro, (November 2017).

37 Cape Town: Airports Company South 39 Airports company South Africa, passenger Africa, passenger data for FY2015/16, data for FY2015/16, 2016/17 and YoY up 42 TripAdvisor users vote Cape Town tops, 2016/17 and YoY up to September 2017, to September 2017. Brand South Africa, (5 May 2011). web page: Airport.co.za; London: data comprises Heathrow, Gatwick, 40 Africa’s Leading Airport 2017, World Travel 43 52 Places to Go in 2014, The New York Stansted, Luton, City and Southend airports; Awards (2017). Times, (2014). data from Terminal and Transit Passengers 2016, Civil Aviation Authority (2016) 41 Africa’s Leading City Destination 2017, 44 Expert Guide to Cape Town, Travel, The World Travel Awards (2017). Telegraph. 40 PwC City gateway Hotel rooms International tourists International association Incoming/ outgoing World Top 100 airports Airport connectivity meetings passenger flows

1 3 2 4 1 5 1

2 7 4 2 4 17 3

3 6 11 10 3 4 11

4 8 1 7 12 3 18

5 (1) 1 (1) 18 (6) 8 (1) 7 (2) 7 (1) 10 (3)

6 11 3 5 16 1 16

7 2 6 22 2 20 4

8 4 5 17 10 15 6

9 (2) 9 (2) 9 (2) 14 (3) 6 (1) 13 (5) 9 (2)

10 22 8 9 11 2 13

11 24 12 6 15 6 5

12 10 19 1 18 12 12

13 (3) 13 (3) 7 (1) 13 (2) 17 (5) 8 (2) 20 (4)

14 (4) 15 (5) 14 (3) 25 (9) 8 (3) 18 (6) 2 (1)

15 12 16 3 24 25 7

16 5 13 29 9 24 19

17 16 27 24 5 22 8

18 17 22 15 20 16 14

19 25 23 12 21 9 25

20 19 21 26 13 14 23

21 23 10 19 25 25 15

22 26 20 11 27 21 17

23 (5) 13 (3) 28 (10) 18 (5) 19 (6) 25 (9) 21 (5)

24 (6) 31 (13) 15 (4) 27 (10) 28 (10) 10 (3) 22 (6)

25 (7) 20 (7) 25 (8) 28 (11) 14 (4) 19 (7) 28 (10)

26 (8) 21 (8) 24 (7) 20 (6) 22 (7) 25 (9) 24 (7)

27 (9) 18 (6) 26 (9) 16 (4) 26 (9) 25 (9) 29 (11)

28 (10) 27 (9) 17 (5) 30 (12) 23 (8) 25 (9) 26 (8)

29 (11) 29 (11) 29 (11) 21 (7) 30 (12) 11 (4) 31 (13)

30 (12) 28 (10) 31 (13) 23 (8) 29 (11) 23 (8) 27 (9)

31 (13) 30 (12) 30 (12) 31 (13) 31 (13) 25 (9) 30 (12)

Rank out of 31 cities (rank out of 13 middle-income country cities, if applicable)

Fully booked One way of assessing whether there is While some cities have regulated excess demand is by looking at the city’s Airbnb strictly, Cape Town has taken Despite its popularity with tourists, number of listings on short-term rental a partnership approach, recently Cape Town has a relatively low number site Airbnb. Cape Town has 17,000 concluding a ‘hospitality collaboration of Hotel rooms. This is despite strong active listings (40% of South Africa’s agreement’ with the company, the first demand for, and success of, the city’s total), which puts it just behind the such agreement in any African country. 45 existing hotels. It is possible that the site’s top 10 most popular destinations, The aim is to promote Cape Town as a hotel sector is simply in the process of and on a par with cities such as destination on the Airbnb website and catching up. Amsterdam, Sydney and Copenhagen. app, and will also celebrate Cape Town as an ‘Ideas Capital’ by hosting the Africa Travel Summit.

45 The One & Only was voted the best hotel in South Africa in 2017, See: South Africa’s Leading Hotel 2017, World Travel Awards (2017). Cape Town – African city of opportunity 41 Picture taken by Wessel Van Wyk

“As a business, we have never been more aware of our responsibility to make a meaningful socio-economic contribution into the lives of the people of Cape Town. So as well as taking our jobs at the airport very seriously, we are committed to making a positive and lasting impact on the lives of our neighbours. And we see the airport’s growth as the catalyst to doing just that. As a growing airport it is our responsibility to ensure that our surrounding communities grow with us. We are excited about what the future holds for the airport and the City”

Deon Cloete General Manager, Cape Town International Airport

42 PwC Picture taken by Wessel Van Wyk

“The city of Cape Town is both a special and a unique destination in many ways, offering spectacular natural beauty and a lifestyle to match for both visitors and locals. History, industry, commerce and tourism are intertwined to make for an incredibly special place. With a waterfront that is one of the best in the world and the most successful and frequently-visited destination in Southern Africa, the opportunities remain vast for innovation and enterprise, something that Cape Town continues to showcase in ways that inspire.”

David Green, CEO, V&A Waterfont

“As the gateway to an attractive destination such as Cape Town, Cape Town International Airport has an important role to play in the region. We are well aware that airports are catalysts for socio-economic growth. Cape Town Airport has organically been growing into an aerotropolis – a concept which sees an airport at the core of extensive economic activity. Together with our regional partners we are actively driving this opportunity to see Cape Town and the Western Cape continue to grow and to leverage off the advantages that comes from a well-run airport.”

Deon Cloete General Manager, Cape Town International Airport

Cape Town – African city of opportunity 43 Quality of life

Although they may move to cities in search of work, people bring their lives with them. In the age of ubiquitous connectivity, remote working and virtual teams, cities must offer more than just employment and education. This section considers the overall quality of life offered to citizens using four indicators: Health, safety and security, Sustainability and the natural environment, Demographics and liveability and Transportation and infrastructure. 44 PwC Cape Town – African city of opportunity 45 Score

Tokyo 1 159

Toronto 2 156

Sydney 3 145

Berlin 4 142

Stockholm 4 142

Singapore 6 141

Amsterdam 7 139

4. Health, safety London 8 138

Madrid 9 132 and security Paris 10 130 Hong Kong 11 127

San Francisco 12 126

Milan 13 121

Seoul 13 121

Los Angeles 15 119

Chicago 16 116

New York 16 116 In crowded, complex cities, safety and visibility. In Australia, the programme health are major concerns. Citizens saw a 20% reduction in alcohol-related Dubai 18 97 who are healthy and feel safe will also traffic injuries within two years of Mexico City 19 (1) 78 be more economically productive. And implementation.47 as well as its primary cost, crime deters Shanghai 20 (2) 67 investment. Cities differ in the level Crime Cape Town 21 (3) 65 of control they have over health and Cape Town also scores poorly on Crime. Johannesburg 22 (4) 63 public safety systems, but all share the Gang violence in Cape Town brings Beijing 23 (5) 58 desire to get these fundamentals right. extremely high levels of crime and Moscow 24 (6) 46 Cape Town ranks mid-table for Health, homicide and, although such crime is safety and security, but its individual mainly confined to certain areas (see Jakarta 25 (7) 45 scores are mixed. page 48), the overall figures have led to Cape Town being ranked the 13th Kuala Lumpur 25 (7) 45 Driving safety forward most violent city in the world, albeit São Paulo 25 (7) 45 slightly improved from 2015 when it Rio de Janeiro 28 (10) 44 The city can improve on Road safety was ranked ninth.48 where it finishes joint bottom with Mumbai 29 (11) 43 Johannesburg. South Africa’s road The City of Cape Town Metropolitan network is by far the best in Africa, Police Department has a dedicated Bogotá 30 (12) 42 but road deaths remain stubbornly Gang Unit which focuses on combating Lagos 31 (13) 12 high despite awareness campaigns, drug dealing and gangsterism, but High-income countries Cape Town education initiatives and law many of the resources and powers Middle-income countries enforcement. The Western Cape’s remain with the national South African figures are only slightly better than the Police Service (SAPS). In 2014, the To make matters worse, the national national average, 9% of the country’s Khayelitsha Commission found that in paramedics’ trade union recently 46 total road deaths in 2016. Cape Town some of the highest crime threatened to withdraw its services in areas in the country had the lowest some of these areas due to the targeting In a good example of collaborative 49 SAPS police-to-population ratio. 50 government, however, the city, of ambulances by criminals. provincial and national governments If the need for collaborative policing have recently teamed up to launch 47 See: It Won’t Kill You to Slow Down, Safely Home, Campaigns, Western Cape was clear, the solution may be the ‘Safely Home’ campaign, which Government webpage (2017). forthcoming. In 2016, the city is based on an Australian model of administration launched a new random breath testing, speeding 48 The 50 Most Violent Cities in the World, Mexican Council for Public Security and technology solution, ‘EPIC’, which aims fines and awareness around the use Criminal Justice, (2016). to ‘draw a balance between safe cities of mobile devices and pedestrian 49 Towards a Safer Khayelitsha, Report of the Commission of Inquiry into Allegations 46 South Africa’s shocking road death of Police Inefficiency and a Breakdown 50 Red Zone Declared after Armed Robbers numbers at highest level in 10 years, in Relations between SAPS and the hit Ambulance in Cape, Daily Maverick (17 BusinessTech, (9 June 2017). Community of Khayelitsha (August 2014). November 2017). 46 PwC Health, safety and Road safety* Health system End of life care* Crime Political environment Security and disease security performance* risk

1 8 2 13 4 5 1

2 11 4 10 6 3 2

3 10 16 2 5 6 8

4 7 12 3 15 2 11

4 2 7 14 9 1 17

6 5 1 11 1 13 20

7 4 15 4 8 3 19

8 3 13 1 12 13 12

9 6 5 18 10 15 6

10 9 8 9 17 6 13

11 1 9 17 2 15 21

12 13 18 5 11 9 10

13 12 3 16 14 8 18

13 18 6 15 7 18 7

15 13 18 5 19 9 9

16 13 18 5 17 9 14

16 13 18 5 16 9 15

18 17 14 12 3 23 26

19 (1) 19 (1) 22 (4) 24 (6) 26 (8) 20 (3) 3 (1)

20 (2) 23 (5) 9 (1) 29 (11) 13 (1) 26 (8) 25(8)

21 (3) 30 (12) 29 (11) 19 (1) 27 (9) 17 (1) 5 (3)

22 (4) 30 (12) 29 (11) 19 (1) 29 (11) 18 (2) 4 (2)

23 (5) 23 (5) 19 (1) 29 (11) 22 (4) 27 (9) 24 (7)

24 (6) 25 (7) 27 (9) 25 (7) 23 (5) 30 (12) 16 (4)

25 (7) 20 (2) 26 (8) 26 (8) 20 (2) 28 (10) 27 (9)

25 (7) 29 (11) 23 (5) 21 (3) 23 (5) 21 (4) 30 (12)

25 (7) 27 (9) 24 (6) 22 (4) 28 (10) 24 (6) 22 (5)

28 (10) 27 (9) 24 (6) 22 (4) 30 (12) 22 (5) 23 (6)

29 (11) 21 (3) 28 (10) 27 (9) 21 (3) 24 (6) 28 (10)

30 (12) 22 (4) 17 (3) 28 (10) 25 (7) 29 (11) 29 (11)

31 (13) 26 (8) 31 (13) 31 (13) 31 (13) 30 (12) 31 (13)

Rank out of 31 cities (rank out of 13 middle-income country cities, if applicable) and smart cities’.51 This programme City improvement districts powerful vehicles for regeneration integrates six emergency and policing in Cape Town, but they are not services onto one common technology Another example of successful appropriate in poorer areas where there platform with a joint command centre. collaboration is in the formation of are very few or no property owners However, the system does not include City improvement districts (CIDs) and little excess disposable income. In SAPS, meaning that the full benefits in which property owners in an area such areas government must intervene available cannot be realised. pay a little more in return for extra actively to improve outcomes. services – usually in the form of street All levels of government can benefit from cleaning, extra security and extended Health and resilience technology-enabled collaboration if the services like recycling. The first of these motivation can be found to embrace such districts was founded in 1999 by the Cape Town scores poorly on Health partnerships. City of Cape Town along with the South system performance, and moderately for African Property Owners Association End of life care, both of which are also and the Cape Town Regional Chamber scored at the national level. As with 51 Cape Town’s new Technology-Based of Commerce and Industry. Today there safety, health is an area of overlapping Public Safety Programme could be an Epic are 39 in the city. CIDs have been very responsibilities between the provincial First, IT Web (30 September 2016). Cape Town – African city of opportunity 47 and city governments with the city delivering some primary care and Box 3 mainly responsible for environmental health. Functions such as the monitoring of food and water quality, Crime in Cape Town waste management, air and noise A tale of two cities pollution and prevention of diseases are unlikely to improve citizen satisfaction scores or win votes, but they are Fig. 7 Murders reported across different parts of Cape Town fundamental to achieving resilience in a city of four million people.

Achieving ‘resilience’ is a key focus area for many cities in a turbulent world, as set out in box 4. The City of Cape Town has embraced this approach – it is a member of the 100 Resilient Cities programme, and has appointed a Chief Resilience Officer.

This study finds that in some ways, the city’s need for resilience may actually be less than most – it comes in the top five for Security and disease risk, as measured by nine broad metrics in the Lloyd’s City Risk Index 2015–2025.52

Two exceptions to this are the water shortages (see Sustainability and the Highest rate reported natural environment) and Political Lowest rate reported environment, where the city’s mid-table score is based on national political factors. PwC visualisation of Crime Statistics in SA (South African Police Service, 2017)

Crime is a problem in Cape Town, as shown by the city’s strategic focus on 52 See: Lloyd’s City Risk Index 2015-2025, becoming a ‘safe city’. However, an analysis of the spatial distribution of crime Lloyd’s (2015). reveals that this is a tale of two cities, as can be seen from the reported murder rate at police precincts in 2017. The most serious crimes are largely confined to the sprawling informal settlements on the Cape Flats and absent from the tourist areas around the CBD and Atlantic seaboard.

This can be attributed in part to a gang culture in the townships but, disparities in security provision are also evident. In 2014, the Khayelitsha Commission of Inquiry into allegations of police inefficiency and a breakdown in relations between SAPS and the community in Khayelitsha found that some areas of Cape Town had the highest crime rates in the country, and the lowest SAPS police-to-population ratio, highlighting the importance of local and national policing collaboration.53

Such disparities are increased by the widespread use of private security firms in the areas that are able to pay for them.

The City of Cape Town’s new EPIC technology solution (see page 46) is improving response times, but further integration is required, particularly with the South African Police Service.

Safety interventions can have outsized returns: If people do not feel safe, they are less likely to be economically productive, or socially integrated. This is particularly harmful in early life – children who miss school because of safety concerns are less likely to get good grades, meaning their chances of affording safe housing in later life is diminished further.

53 Towards a Safer Khayelitsha: Report of the Commission of Inquiry into Allegations of Police Inefficiency and a Breakdown in Relations between SAPS and the Community of Khayelitsha, Khayelitsha Commission (August 2014).

48 PwC Box 4 Urban resilience

Traditional asset management and disaster planning has given way in recent years to ‘resilience’, with many organisations including the OECD , World Bank and Rockefeller offering different frameworks.

In our view, urban resilience means being able to withstand shocks in four areas, all of which government has a role in fostering:

Environment Organisation

Cities are a mix of the natural and the Cities should be both financially and man-made physical world, and fiscally independent organisations, environmental resilience involves both. which involves sustainable revenue Building codes, pollution controls, flood management and cash flow and the defences, early-warning systems, water effective use of these funds to achieve supply and public health are all areas outcomes. This requires motivated and where cities can have a major impact. competent staff from finance through to service delivery. Measured by: carbon footprint, air pollution, compliance with building Measured by: financial ratios, grant standards, immunisation rates, water- funding as a % of revenue, audit related business risk* opinion, qualification levels of staff, Urban vacancies. resilience Economy Society

Achieving economic resilience is Much of social resilience is determined challenging but government can play a key by factors such as diversity, inequality, role. In a direct sense, government culture and social cohesion – all of spending can create transformative which are hard for city governments to economic infrastructure, such as roads, affect. However, genuine citizen dams and servers, or can be used to engagement, good service delivery, subsidise education, training, small transparency and good governance all businesses and start-ups. Indirectly, cities help to create trust in government and have even more power to create the right institutions making better civic balance of legislation and incentives that behaviour more likely. will attract investment, trade, talent and create a productive economy. Measured by: number of open data downloads, transparency scores, citizen Measured by: gross fixed capital formation, satisfaction scores, service delivery broadband speed, productivity, ease of statistics, happiness indices. doing business score, number of start-ups.

*As provided by the World Resources Institute for this study (see appendix A for detail)

The City of Cape Town has embraced the concept of resilience. As one of the members of the Rockefeller Foundation’s 100 Resilient Cities program, it employs a Chief Resilience Officer and was chosen as one of the pilot cities to develop the foundation’s ‘City Resilience Index’, currently underway.

The recent drought has also given the city first-hand experience of the importance of water resilience, which is a lesson many other cities around the world will have to learn in the coming decades.

Developing water resilience may be Cape Town’s biggest priority in 2018, but becoming a resilient city involves much more than drought alleviation.

Cape Town – African city of opportunity 49 Score

Sydney 1 174

Stockholm 2 173

Toronto 3 156

Seoul 4 155

Amsterdam 5 150

Berlin 5 150

Paris 7 146

5. Sustainability San Francisco 8 141

Madrid 9 136 and the natural Milan 9 136 Chicago 11 129

Moscow 12 (1) 125 environment London 13 119 Los Angeles 14 114

New York 15 113

Tokyo 16 112

A key determinant of quality of life is popular tourist attractions, with more Cape Town 17 (2) 106 a city’s natural environment and the than a million visitors a year. extent to which it is being sustained Hong Kong 18 103 The city’s top 10 score for Air pollution for future generations. Nestled Rio de Janeiro 19 (3) 102 between the Atlantic Ocean and Table (first among the MICCs) is partly a Johannesburg 20 (4) 100 Mountain, and with more than 30 result of this green space. Its coastal nature reserves and conservation areas location may help (at the cost of windy Singapore 21 99 weather), but this is not a guarantee – within the city boundaries, Cape Town Mexico City 22 (5) 95 scores well for Sustainability and the some of the world’s most polluted cities natural environment, beating all other are coastal, including Shanghai, which Beijing 23 (6) 93 ranks close to the bottom of this study. middle-income country cities (MICCs) Shanghai 24 (7) 92 except Moscow. Cape Town’s clean air owes more to the São Paulo 25 (8) 91 fact that most of its economic activity However, this variable measures more Bogotá 26 (9) 88 than just natural beauty, and in doing is in non-industrialised services, and so, it also uncovers areas where the city it has almost no mining. Nevertheless, Kuala Lumpur 27 (10) 70 some areas are much more polluted can improve. Lagos 28 (11) 63 than others; heavy traffic has an impact The city’s highest score is for Thermal along trunk routes, and informal Mumbai 28 (11) 63

comfort – a ‘goldilocks’ measure that settlements, where residents commonly Dubai 30 55 rewards cities that are neither too hot burn wood and other materials to stay nor too cold – and one of a few factors warm, are the most polluted areas in Jakarta 31 (13) 50 54 in this study that policymakers have no the city. High-income countries Cape Town control over. Middle-income countries Recycled waste is an area where Cape Green Cape? Town has room for improvement internationally despite performing well an ominous threat. The prevalence A mid-table score for Public park space in South Africa (see page 53). of informal settlements and illegal belies the fact that many areas, in electricity connections means that these particular the Cape Peninsula, are wild, Natural resilience fires can have tragic consequences. undeveloped terrain which improve air quality and increase biodiversity but Natural disaster preparedness is an area However, Cape Town’s most pressing are not officially designated as public where the city (judged at the national concern is not fire, but water. A poor space. level) has a low score, but where there score for Water-related business risk have been exciting new developments highlights the threat to water-intensive And Cape Town’s public parks are (see EPIC on page 46). industry, but the city’s primary concern particularly impactful: The city’s CBD is keeping water flowing for its four Cape Town’s Natural disaster exposure is overshadowed by Table Mountain million residents. National Park. As well as providing is relatively low, though its dry, windy a natural playground for residents, summers mean that wildfires are and habitat for many species, Table 54 Cape Town air among the Worst, Sisi Mountain is one of the country’s most Lwandle, IOL, (12 February 2013) 50 PwC Sustainability and the Natural disaster Natural disaster Thermal comfort Recycled waste Air pollution Public park space Water-related business natural environment exposure preparedness risk

1 4 7 3 8 2 9 17

2 13 8 24 2 1 2 1

3 4 5 23 10 9 13 4

4 17 3 18 4 20 4 3

5 30 5 16 2 8 5 8

5 15 14 20 1 3 10 11

7 21 17 14 7 14 3 2

8 19 20 7 5 5 7 20

9 2 13 11 26 10 17 9

9 16 10 15 11 17 14 5

11 1 16 22 12 3 19 22

12 (1) 3 (1) 21 (4) 25 (9) 23 (8) 19 (3) 1 (1) 7 (2)

13 19 4 13 15 7 28 19

14 22 22 6 6 15 11 28

15 11 19 18 24 10 6 23

16 31 1 10 20 6 26 18

17 (2) 12 (6) 25 (7) 2 (2) 27 (10) 10 (1) 15 (4) 27 (10)

18 28 2 11 14 16 29 21

19 (3) 6 (2) 29 (11) 8 (5) 31 (13) 25 (7) 8 (2) 15 (7)

20 (4) 7 (3) 26 (8) 3 (3) 29 (11) 26 (8) 20 (7) 13 (5)

21 9 9 28 16 13 24 26

22 (5) 22 (9) 23 (5) 1 (1) 19 (5) 27 (9) 21 (8) 16 (8)

23 (6) 9 (5) 12 (2) 21 (8) 17 (3) 30 (12) 12 (3) 30 (12)

24 (7) 22 (9) 11 (1) 17 (7) 13 (2) 28 (10) 16 (5) 25 (9)

25 (8) 14 (7) 28 (10) 5 (4) 30 (12) 20 (4) 30 (12) 6 (1)

26 (9) 27 (13) 24 (6) 9 (6) 22 (7) 17 (2) 27 (11) 10 (3)

27 (10) 22 (9) 18 (3) 31 (13) 24 (9) 22 (5) 25 (10) 12 (4)

28 (11) 8 (4) 31 (13) 27 (11) 21 (6) 29 (11) 31 (13) 14 (6)

28 (11) 17 (8) 26 (8) 25 (9) 9 (1) 30 (12) 23 (9) 31 (13)

30 29 15 29 28 22 22 24

31 (13) 26 (12) 30 (12) 30 (12) 17 (3) 24 (6) 18 (6) 29 (11)

Rank out of 31 cities (rank out of 13 middle-income country cities, if applicable)

South Africa is the 30th driest country the taps. However, a huge decrease in side, with 500 additional megalitres in the world, but uses 30% more water water usage by residents has so far been (ML) per day from groundwater than the average country in the world.55 successful in pushing back this date sources, land and sea-based In Cape Town, this has been sustainable beyond 2018, by which time it is hoped desalination and re-use schemes. until recently, as winter rainfall has rainfall will have replenished the dams. However, the city is also tackling been able to replenish dams for the demand for water, both through dry summer. However, as the graph In keeping with its wider resilience ‘soft’ awareness campaigns and ‘hard’ on page 52 shows, winter rains have agenda, the City of Cape Town’s usage restrictions (currently Level 6B, fallen short for the past three years, recent Water Resilience plan is a meaning 50L per person per day) with making the situation critical. The city comprehensive and ambitious attempt heightened enforcement programmes. 56 has taken the unprecedented step of to solve this pressing problem. announcing a ‘Day Zero’ – when Cape This has seen great success so far: Total It is primarily focused on the supply Town would become the world’s first usage (which includes agricultural and major city in the modern age to turn off 56 Advancing Water Resilience: Getting to an industrial users) fell from 1 200 ML day additional 500 million litres of new water in 2015 to 519 ML/day in May 2018.57 55 Running on Empty: What Business, a day, Speech by the Mayor of the City of Government and Citizens must do to Cape Town, Patricia de Lille, City of Cape 57 City of Cape Town: Water Dashboard, 02 confront South Africa’s water crisis, Action Town (17 Aug 2017). March 2018 Aid (April 2016). Cape Town – African city of opportunity 51 The figure shows that tourists contributed to the cause, using much Fig. 8 Three years of drought less water than had been forecast over the busy Christmas period, but it is Percentage storage in Cape Town’s major dams likely that such water restrictions, if maintained, would hamper tourism in the long run. 71.0%

Further examples can be found within Figures are for 7 May of each year this study. Officials in Los Angeles, situated in drought-prone California, have come up with the innovative 51.6% solution of floating plastic balls on the surface of reservoirs, which prevents evaporation and could save 300 million 58 gallons of water a year. 31.8% São Paolo is proof of the need for water resilience: It ranks sixth for Water- related business risk but since this study 22.4% was concluded, it has been hit by its 20.9% worst drought in 80 years.59

58 Millions of ‘Shade Balls’ to Prevent Evaporation in California Reservoirs, Danny Clemens, Discovery.com (8 December 2015).

59 Lessons from São Paulo’s Water Shortage, Sandra Postel, National Geographic (March 2014 2015 2016 2017 2018 2015). Source: City of Cape Town, 2018. Note: Dam Levels, City of Cape Town Webpage, available weekly.

“The City was the first municipality in the country to allow legal connections of small-scale embedded generation systems (such as solar PV), with a feed-in tariff. Nineteen (80%) of municipalities have since adopted similar systems. This work has unlocked significant opportunities for innovation and investment for businesses in the renewable energy space.”

Mike Mulcahy, CEO, GreenCape

52 PwC Box 5 Trash talking

In 2016, 27% of Capetonian households separated waste for recycling, compared with an SA metro average of just 16% (see chart below).60 However, the city should note that almost all of this recycling is driven by formal households – with just 2% of those living in informal dwellings separating waste. By extending recycling services to informal households – of which there are more than a quarter of a million – the city could drastically reduce the amount it sends to landfill.

The European Union requires all member states to recycle or compost more than 50% of waste by 2020, and plans to raise this to 70% by 2030.61 In South Africa, by contrast, this figure was less than 10% when baselined in 2011. Cape Town does better at 14.4%, but for the city to continue to improve, it should act locally, rather than waiting for the rest of the country.

The benefits of recycling include the conservation of finite resources, an improved environment and increased employment, all of which justify government intervention. But the city already spends around R2 billion a year on solid waste management, and there are many other pressures on public funds.

An example can be taken from Mumbai, which ranks top of the middle-income country cities in this study and where it is estimated fully 80% of solid waste is recycled. The centre of the city is home to Dharavi, a huge slum – made famous by the film Slumdog Millionaire – where around a quarter of a million people are estimated to work in informal recycling plants, collecting trash from all over the city, separating it by hand and eventually feeding it into large recycling plants for a profit.

This unique system was borne out of necessity rather than design, and it should be noted that municipal involvement in the process is minimal. However, for Cape Town, where recycling levels are relatively low, and unemployment high, putting in place the incentives that would allow for such a system could be an opportunity to solve two important problems at once.

“Globally, the underlying Fig. 9 economics of alternative Recycling by type of dwelling: Big five SA metros green infrastructure is changing rapidly. The City’s 35% commitment to resilience and the green economy puts 30% it at the forefront of these efforts in sub-Saharan Africa. 25% Through this deliberate leadership, a strong vision, and a provincial government 20% dedicated to green economic

growth, Cape Town has 15% become a great place for green businesses. GreenCape supports the City’s efforts 10% by helping businesses

and investors unlock 5% opportunities for investment and growth.” 0

Cape Town eThekwini Ekurhuleni Johannesburg Tshwane Mike Mulcahy, CEO, All Formal Informal GreenCape Source: General Household Survey, Statistics SA (2016)

60 General Household Survey, Statistics South Africa (2016).

61 Waste: Boost Recycling, cut Landfilling and Curb Food Waste, Parliament says, Press Release, Plenary Session, European Parliament (14 March 2017).

Cape Town – African city of opportunity 53 Score

New York 1 172

Paris 1 172

London 3 169

Los Angeles 4 165

San Francisco 5 164

Amsterdam 6 158

Toronto 7 154

6. Demographics Berlin 8 153

Chicago 9 140 and liveability Stockholm 10 139 Hong Kong 11 136

Tokyo 12 129

Sydney 13 128

Madrid 14 127

Seoul 15 126

Mexico City 16 (1) 117

Every city has its own unique character, through both housing and transport Singapore 17 114 the product of the people that live links. The City’s new Transit and Urban there, the way things are done and the Development Authority seeks to do this Dubai 18 113 city’s history, cultural assets and ‘buzz’. over the coming years. Moscow 19 (2) 101 Such factors are of huge importance Rio de Janeiro 20 (3) 97 to city success; our latest global Cities Inequality in Cape Town – although of Opportunity study finds a strong lower than the country as a whole (see Shanghai 21 (4) 95 page 56) is very high by international correlation between quality of life Beijing 22 (5) 93 factors and overall ranking.62 standards – also explains its poor scores for Quality of living and Senior Milan 23 89 Cape Town ranks close to the bottom wellbeing. São Paulo 24 (6) 76 for Demographics and liveability, uncovering an uncomfortable paradox. Competing on culture Kuala Lumpur 25 (7) 72 While the city’s reputation as a holiday The city scores poorly for Entertainment Bogotá 26 (8) 70 destination goes from strength to and attractions, a surprising result strength, with passenger numbers up Johannesburg 27 (9) 67 given Cape Town’s success in recent 24% annually (see City gateway), the Mumbai 28 (10) 53 years with tourism and its role as a host proportion of people living in informal venue for of the 2010 FIFA World Cup Jakarta 29 (11) 47 settlements also continues to grow.63 (see City gateway). This variable focuses Cape Town 30 (12) 42 It is hard to miss the sprawling tin roofs on man-made attractions rather than of Khayelitsha as your plane approaches the ecotourism Cape Town is renowned Lagos 31 (13) 10 for. However, the city is hardly a Cape Town International Airport, High-income countries Cape Town cultural backwater, boasting tens of but aside from such brief encounters, Middle-income countries tourism and township life in Cape Town theatres and museums, countless wine farms, a travelling open air cinema, and are worlds apart. opened its door to 6.3 million people,64 its own philharmonic orchestra. three times more than Cape Town’s Neither is solving this simply a matter of International Airport.65 building enough houses to keep up with Furthermore, August 2017 saw the opening of the continent’s latest and new arrivals. South Africa’s past has left Cape Town’s score for City brand is also largest contemporary art museum. the country divided in both wealth and low. This variable takes into account The Zeitz Museum of Contemporary Art spatial inequality; rectifying the latter many different factors, and is affected Africa houses the largest collection of means changing the city’s urban form by the city’s high crime statistics. contemporary African art in the world Although this is a major priority for 62 Cities of Opportunity 7 Report, PwC and helps make the case for Cape Town the city government, crime in Cape (2016). as the continent’s arts and culture 63 Cape Town is the only city in South Africa capital. 64 Visits made in 2016 to Visitor Attractions where the proportion of people living in in Membership with ALVA, Association of informal settlements increased in the five Realistically, Cape Town is unlikely to Leading Visitor Attractions, (2017). years from 2011 to 2016, largely due to ever compete on completely equal terms

population growth in the City. See: The with some of the cities in this study. In 65 Cape Town International Airport – State of South African Cities Report 2016, Passenger Traffic, Airports.co.za South African Cities Network (2016) 2016, London’s National Gallery alone (September 2017). 54 PwC Demographics and Entertainment and Quality of living Working age population City brand Relocation Senior wellbeing* YouthfulCities Index liveability attractions attractiveness

1 3 16 23 2 2 5 1

1 2 4 17 5 5 13 6

3 1 15 22 3 1 11 2

4 7 10 21 1 6 5 9

5 18 13 7 9 4 5 4

6 13 7 11 4 16 4 11

7 15 1 16 21 8 2 7

8 5 6 20 22 12 3 3

9 12 9 25 14 11 5 8

10 20 3 29 10 17 1 5

11 23 8 8 6 10 19 14

12 6 5 24 26 13 9 12

13 22 2 28 16 3 12 13

14 8 11 26 13 9 14 16

15 11 17 6 7 20 22 15

16 (1) 10 (3) 27 (9) 4 (3) 16 (3) 23 (5) 17 (2) 10 (1)

17 26 13 13 15 7 10 26

18 17 21 1 11 15 15 31

19 (2) 4 (1) 19 (2) 15 (9) 12 (2) 27 (9) 26 (8) 20 (4)

20 (3) 16 (5) 24 (6) 19 (11) 8 (1) 18 (1) 24 (6) 18 (2)

21 (4) 14 (4) 22 (4) 2 (1) 28 (10) 19 (2) 20 (3) 24 (8)

22 (5) 9 (2) 20 (3) 3 (2) 29 (11) 25 (7) 21 (4) 24 (8)

23 21 12 31 22 14 18 17

24 (6) 19 (6) 24 (6) 14 (8) 20 (6) 26 (8) 24 (6) 21 (5)

25 (7) 28 (10) 18 (1) 10 (6) 27 (9) 24 (6) 16 (1) 29 (12)

26 (8) 24 (7) 28 (10) 5 (4) 25 (8) 30 (12) 23 (5) 19 (3)

27 (9) 27 (9) 24 (6) 9 (5) 24 (7) 22 (4) 29 (11) 22 (6)

28 (10) 30 (12) 29 (11) 12 (7) 18 (4) 28 (10) 27 (9) 27 (10)

29 (11) 25 (8) 30 (12) 18 (10) 19 (5) 29 (11) 28 (10) 28 (11)

30 (12) 29 (11) 23 (5) 27 (12) 31 (13) 21 (3) 29 (11) 22 (6)

31 (13) 31 (13) 31 (13) 30 (13) 30 (12) 31 (13) 31 (13) 30 (13)

Rank out of 31 cities (rank out of 13 middle-income country cities, if applicable)

Town is mainly confined to the poorer People power Cape Town scores relatively well in the townships and suburbs, with tourist Youthful Cities Index, which looks at areas such as the V&A Waterfront Cape Town’s Working age population how youth live, work, and play in urban having the lowest crime rates in the city is a relatively small proportion of settings. (see page 48). the total population, particularly compared with other middle-income It does better still for Relocation Invest Cape Town, which was launched countries. Where cities are close to full attractiveness, a measure of how in 2016, aims to bring all interested employment, this can prove challenging attractive a city is to footloose migrants parties together to improve the city’s as economic output is hampered by with many location options. This international brand in the coming a lack of workers or large dependent is emphasised by Cape Town’s high years. populations (children and the old). proportion of educated immigrants, as This is not the case in Cape Town where shown on page 57. unemployment, although much lower than the national average, is still very high.

Cape Town – African city of opportunity 55 Box 6 Shared growth in South African cities

Rapid urbanisation means that many of humanity’s problems are felt in cities first and most forcefully. Many of the agglomeration effects that make cities so much more productive than rural areas also bring side-effects, including rising inequality. Higher productivity often comes at the cost of lower wages, and the cost of living in cities is usually higher, especially for housing (see Cost).

City governments face a dilemma: Allow inequality to rise, or intervene by taxing the wealthy and distributing to the poor? The former is a recipe for political unrest, the latter may discourage investment. Creating inclusive growth is one of the central tasks of any democratic city government.

In South Africa, long the world’s most unequal country of any significant size, inequality is particularly entrenched, but the country’s metros have relatively strong redistributive powers that they can use to tackle this.66 Examples of this include providing free basic services and housing, direct grants and the use of their balance sheets to create social and economic infrastructure that benefits everyone.

The Gini coefficient is the most popular way of showing income inequality. It is a number from 0 to 1 where 0 means that everyone earns exactly the same amount, and 1 means that one person receives all the income.

Figure 10 presents two separate Ginis coefficients for South Africa’s big Fig. 10 Income inequality in SA’s big five metros five cities. The ‘market’ Gini roughly describes how unequal income would

be if the government didn’t provide 0.7 any redistribution – no grants, no

taxes. The ‘real’ Gini shows the score 0.6 as it is after all interventions. By

subtracting one from the other we can 0.5 get a measure of how much each city manages to distribute. 0.4

Cape Town has the lowest income 0.3 inequality (real Gini) of any of the

metros and along with eThekwini, it 0.2 manages to achieve lower levels of real

inequality than the country as a whole. 0.1

For this study, we also created a Cape Town eThekwini Ekurhuleni Johannesburg Tshwane South Africa 0 ‘Shared growth index’, which shows

the cities that manage to redistribute Market Gini Shared growth index the most while maintaining healthy Real Gini Distribution economic growth.67 To be able to do this, cities must build strong Source: PwC analysis of data from Quantec (2018); Real gross-value-added (GVA) growth relationships with business and average 2010-2016; Gini coefficients for 2014 Note: For Ginis, lower is better (fairer); for shared growth index (SGI), higher is better. residents and demonstrate efficiency Distribution is a policy choice. and transparency with how they use money raised from the public.

Again, Cape Town and eThekwini come top, this time with the order reversed.

The ‘Shared growth index’ is not meant to be indicative of success, and has no specific policy implications, but may provide food for thought. The index could be much improved by replacing gross-value-added (GVA) growth with better proxies such as foreign and local investment, business confidence and purchasing managers’ indexes, though these can be difficult to obtain at the city level.

66 Of countries with populations greater than 1m; some small islands may be more unequal. See: Gini Index (World Bank estimate), Development Research Group, World Bank (2011).

67 Shared Growth Index = Average annual GVA growth x Gini redistribution x 100

56 PwC Box 7 Relocation attractiveness The brain drain

The education level of expatriates is a good indication of a city’s relocation attractiveness and shows how cities can import intellectual capital, either to complement or replace home-grown talent.

An analysis of South Africa’s top five metros (population >2m) shows that Cape Town outperforms all other metros with 17% of expats having a bachelor’s degree or higher. This is more than three times higher than the figure for the city’s population as a whole (5.5%).

This might go some way to explaining why Cape Fig. 11 Highest level of education among foreign-born population Town has more skilled jobs and much lower unemployment than other SA metros, but it is not an ideal solution. Relying on foreign talent 70% means competing against the rest of the world, and this can be undermined easily by factors 60% outside of the city’s control.

50% Foreign work visas are not easy to obtain in South Africa and political uncertainty and

40% currency movements discourage foreigners from seeking to earn rands. 30% 17% Indeed, Cape Town’s foreign born population is

20% 10% still small by global standards, at just 150,000, 8% 8% 4% or less than 4%. Compare this with top-placed 10% London where 41% of the inner-city population is foreign-born.68 This follows global trends Cape Town eThekwini Ekurhuleni Johannesburg Tshwane 0 – the United Nations finds that on average international migrants account for a much Bachelor’s or higher Matric or higher higher proportion of the workforce in developed (12.6%) than in developing countries (1.9%).69 Source: PwC analysis of Community Survey, Stats SA (2016) Cape Town, which has many of the features of a developed country, has the potential to attract more educated migrants.

The figure above also shows vast differences in the basic education levels of foreigners between the metros. In Cape Town, 61% of expats have at least the equivalent of a high-school diploma (i.e. Grade 12/matric) compared with less than 40% for the three Gauteng cities.

This is probably due both to geography and industry. Gauteng is much closer to neighbouring African countries, where education levels are lower and, notwithstanding its large financial sector, many of its migrants still come to work in mining and other menial jobs which are less prevalent in the Western Cape.

68 Migrants in the UK: An Overview, Migration Watch (21 February 2017).

69 Population facts, No. 2010/6, Population Division, Department of Economic and Social Affairs, United Nations (November, 2010).

“The mark of any advanced civilisation is the collective achievements of that civilisation. If we understand each other better, which really is what art does, we create a world we all want to live in. I think that is what is so extraordinary about this moment, the new Zeitz Museum of Contemporary Art Africa in Cape Town, and the collective vision and labour that brought it to fruition. Why a museum? Why here? Why now? And why at the tip of Africa? It’s a symbol, it’s an icon of the confidence we feel about being Capetonians, the confidence we feel about being Africans, the confidence we feel about our place in the world.”

Mark Coetzee, Executive Director and Chief Curator, Zeitz MoCAA Museum of Contemporary Art, Africa

Cape Town – African city of opportunity 57 Score

Singapore 1 180

Dubai 2 158

Stockholm 3 156

Berlin 4 146

Chicago 5 144

San Francisco 5 144

New York 7 136

7. Transportation London 8 133

Paris 8 133

Sydney 8 133

and infrastructure Toronto 11 130

Madrid 12 129

Hong Kong 13 126

Seoul 14 125

Cape Town 14 (1) 125

Amsterdam 16 120

Milan 17 118 Of all the challenges posed to city window, to a 6-10am one.71 In response governments by increased urbanisation, the City has launched a Congestion Kuala Lumpur 18 (2) 113 mass infrastructure – in particular Management Programme (CMP), Tokyo 19 110 transport and housing – is one of which devotes R750m in funds across Los Angeles 20 106 the most pressing. Many cities find it innovative areas such as: hard to build fast enough to keep up Rio de Janeiro 21 (3) 97 • Extending dedicated lanes; with new arrivals. Cape Town is no Moscow 22 (4) 95 exception: The city’s population has • Park-and-ride plans; increased by three quarters of a million, Mexico City 23 (5) 91 70 • Flexible working hours; or 15% in the past decade , and its Beijing 24 (6) 88 location – between a mountain and an • Congestion charge / fuel levy; and ocean – compounds the problem. Shanghai 24 (6) 88 • Encouraging bicycle use through Bogotá 26 (8) 78 Despite this, Cape Town scores highly bike sharing.72 São Paulo 26 (8) 78 for Transportation and infrastructure, In addition, the MyCiTi Bus-Rapid at 14th out of all 31 cities and top of Transport system (BRT), which has Johannesburg 28 (10) 76 the middle-income countries (MICCs). dedicated lanes and is popular with Mumbai 29 (11) 67 It also scores in the top five globally residents, is currently being extended. for Traffic congestion, and is top of the Jakarta 30 (12) 61

MICCs for Ease of commute. Cape Town scores moderately for Lagos 31 (13) 11 Affordability of public transport, These scores may surprise Capetonians which is key to making the city work High-income countries Cape Town – traffic problems are a favourite for everyone and in overcoming the Middle-income countries topic of conversation. This study is city’s pre-1994 spatial legacy (see Cost Making tracks a reminder that Cape Town’s 5pm section). It should be noted that the rush is not unique – across the world, city performs well in South Africa. PwC Cape Town scores less well for Mass congestion is one of the unfortunate analysis shows that of the country’s big transit coverage, which measures the prices paid for living in big cities. five metros, citizens in Cape Town on extent of developable space devoted to rail networks. Rail has long been an However, the problem may be growing: average spend less of their disposable income on transport (see page 60). area of concern for Cape Town, whose Recent data from the City of Cape Town poor network is coupled with poor train Government shows that in the past performance. Net-satisfaction scores two years, peak morning traffic times 71 Travel Demand Management Strategy for the City of Cape Town, Policy Number are just 3% – three times lower than the have doubled in duration from a 7-9am 53760, City of Cape Town Transport and average for South African metros.73 Urban Development Authority, (29 March 2017). 73 The number of people who were satisfied or very satisfied with the overall train service, minus those who were either 72 City Council Approves Projects to dissatisfied or very dissatisfied – PwC 70 Community Survey 2016, Statistics South Alleviate Traffic Congestion, Transport calculations from: National Household Africa (2016); Community Survey 2007, and Development Authority (10 December Travel Survey, Statistics South Africa Statistics South Africa. 2015). (2013). 58 PwC Transportation and Mass transit coverage Affordability of public Licensed taxis City brand Housing Traffic congestion Ease of commute infrastructure transport

1 10 7 9 5 1 1 11

2 19 12 12 1 7 7 8

3 3 27 4 23 8 2 1

4 4 21 24 18 3 6 2

5 18 4 19 13 11 10 5

5 2 2 23 23 10 17 3

7 8 5 27 9 12 18 9

8 11 30 18 4 8 8 12

8 1 9 3 28 16 15 19

8 23 24 29 7 1 3 4

11 13 13 26 12 3 13 14

12 5 22 7 25 14 9 13

13 14 29 20 2 16 11 6

14 7 8 5 21 20 22 16

14 (1) 21(5) 17 (6) 21(9) 19 (8) 6 (1) 5 (2) 10 (1)

16 6 25 11 30 13 12 7

17 9 10 13 29 16 14 15

18 (2) 17 (3) 19 (8) 2 (2) 15 (5) 22 (4) 16 (3) 20 (4)

19 15 14 14 14 15 20 22

20 24 1 31 6 3 25 28

21 (3) 26 (8) 18 (7) 8 (4) 3 (1) 25 (7) 21 (5) 26 (9)

22 (4) 16 (2) 20 (9) 10 (5) 8 (2) 29 (11) 28 (10) 18 (3)

23 (5) 20 (4) 6 (2) 1 (1) 27 (12) 25 (7) 31 (13) 23 (6)

24 (6) 27 (9) 3 (1) 15 (6) 25 (11) 22 (4) 23 (6) 21 (5)

24 (6) 22 (6) 23 (10) 25 (11) 10 (3) 20 (3) 19 (4) 17 (2)

26 (8) 29 (11) 15 (4) 6 (3) 17 (7) 28 (10) 24 (7) 27 (10)

26 (8) 25 (7) 11 (3) 22 (10) 10 (3) 24 (6) 29 (11) 25 (8)

28 (10) 28 (10) 28 (12) 28 (12) 20 (9) 16 (2) 4 (1) 24 (7)

29 (11) 12 (1) 26 (11) 16 (7) 16 (6) 30 (12) 27 (9) 30 (12)

30 (12) 29 (11) 16 (5) 17 (8) 22 (10) 25 (7) 25 (8) 29 (11)

31 (13) 29 (11) 31 (13) 30 (13) 31 (13) 31 (13) 30 (12) 31 (13)

Rank out of 31 cities (rank out of 13 middle income country cities, if applicable)

This problem has been made worse as doing so, it would following the leading Hailed the world over protesters, unhappy with poor service, cities in this study: Many have close to have taken to setting train carriages full control over all modes of transport Cape Town scores poorly in the number alight, devastating around half the within their boundaries, allowing of Licensed taxis per capita, but this city’s rolling stock. them to realise gains in efficiencies, should not concern residents for two coordination of schedules and reasons. First, since 2014, the launch One solution might lie in the devolution pricing, integrated ticketing and user of Uber and other ride-sharing services of powers to the city. Although rail applications.75 has dramatically increased the number is currently a national responsibility, of taxis on the road – and lowered the Department of Transport recently prices as a result. So far, Cape Town announced plans to devolve all urban has not been affected by the protests rail networks to metro governments, against Uber which have taken place and the City of Cape Town has 75 The case for devolution of rail to cities across other South African cities. 74 indicated its readiness to comply. In is well made by the Mayor of London – Rail Devolution business case narrative, 74 National Rail Policy Draft White Paper, Submission to HM Government, Mayor of Department of Transport, Government of London, Sadiq Khan, Transport for London South Africa (July 2017). (14 October 2016). Cape Town – African city of opportunity 59 Second, unregulated minibus taxis, while not seen in most European and Fig. 13 Main method of getting around in South Africa’s big five metros American cities, are ubiquitous in developing countries and are the main method of getting around for a fifth of the population in Cape Town (see chart 100% 76 opposite). 95% 90% Informal taxis plug a sizeable gap in 85% the market of many developing cities, 80% where public transport is either not 75% available or too expensive. But they 70% bring their own problems. Often poorly 65% regulated, they have less incentive to 60% drive safely, have unpublished routes 55% and schedules, and can be magnets for 50% crime. Large taxi operators also have 45% significant workforces and political 40% influence. Any true integrated transport 35% plan in a city like Cape Town must 30% incorporate informal taxis. 25% 20% The City’s recently announced 15% 17 Comprehensive Integrated Transport 10% 58 42 32 32

Plan (CITP) aims to do this in two ways: 5% Cape Town eThekwini Ekurhuleni Johannesburg Tshwane 0 • To integrate minibus taxis as ‘feeder Other (walking, private Car/bakkie driver Car/bakkie routes’ for the formal MyCiTi taxi,bike) passenger buses – similar schemes have been Informal taxi Bus (incl BRT where Train applicable) successful elsewhere; and Source: National Household Travel Survey, Statistics SA (2013). • To embrace new technologies such as e-hailing which would reimagine the system, with benefits for passengers, taxis and the City alike.77,78 Fig. 14 Percentage of total monthly expenditure spent on public transport*; all Cape Town scores very well for its citizens versus the bottom income quintile current levels of Housing, but less well for Major construction activity. These measures are explored further in the

Cost section. 40% 35% 30% 76 National Household Travel Survey, 25% Statistics South Africa (2013). 20% 77 Comprehensive Integrated Transport 15% Plan 2017 - 2022, Transport and Urban 10% Development Authority, City of Cape Town 5% Cape Town eThekwini Ekurhuleni Johannesburg Tshwane (Draft, July 2017). 0 Bottom income quintile All citizens 78 Expanding the public transport network through a feeder bus system –challenges Source: PwC analysis using data from General Household Survey, Statistics SA (2016) and need, Embarq India, (2013). *Train, bus and taxi

“The City of Cape Town is using public transport to achieve a more compact and sustainable city. We have identified major public transport corridors where we are pursuing transit-oriented development (TOD) to transform Cape Town’s spatial reality. TOD is the new order of business – we are pursuing changes in land-use and higher densities in support of the transport system. Ultimately, the right development must happen in the right places, with a mix of land-uses and densification to stimulate economic activity along the transport corridors and to bring down the cost of transport. This is key as lower-income households spend approximately 43% of their monthly income on transport.”

Cllr Brett Herron, City of Cape Town’s Mayoral Committee Member for Transport and Urban Development

60 PwC Box 8 Traffic trends

This study and other datasets paint a nuanced picture of traffic in Cape Town. Tom Tom’s Traffic Index which uses live vehicle speeds from SatNav devices, shows congestion in Cape Town to be 35% (as of March 2018) – this is worse than many smaller cities but ahead of most of the cities in this study.79

However, public sentiment paints a different picture. Using Google trends data, which tracks the popularity of a search term over time it is possible to show how concerned residents are with one issue relative to all others.80 We compared searches for the term ‘traffic’ in four English speaking cities – Cape Town , Johannesburg, Los Angeles (which fares badly in both this study and the Tom Tom index) and Sydney (which fares well in both).81

The figure below shows that over the course of a year, Cape Town’s searches are significantly higher than the other three cities, and that Johannesburg’s are also higher than Los Angeles.

Several possibilities lie behind these scores. Neither Cape Town nor Johannesburg have mass-transit rail systems, meaning road is a more important part of the average commute. Cape Town also suffers from a ‘mono-mode’ spatial legacy whereby a large majority of the jobs are in the city centre and a majority of housing is in the suburbs, resulting in inefficient ‘tidal’ passenger flows (empty buses on return journeys). While many LA residents might work in a business near to their suburban home, this is not possible for most Capetonians.

However, it is possible that residents of Los Angeles – well known for its traffic – have been resigned to live with it and assume longer journey times, while South Africans are still motivated to search for a quicker route, or at least to make their views known publicly.

Note that search data should be interpreted with caution; culture, internet penetration and dilution from other high- impact search terms, such as political events, can all affect the results.

Fig. 12 Frequency of Google searches for the term ‘traffic’ in the year to September 2017

100 90 80 70 60 50 40 30 20 10 0 Nov 16 Dec 16 Jan 17 Feb 17 Mar 17 Apr 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17

Sydney Los Angeles Johannesburg Cape Town

* Note that these figures are not numbers but are a proportion of the total searches – i.e. impact, see Pew research for full Google Trends methodology

79 Tom Tom Traffic Index, Tom Tom (2018).

80 For a full explanation of how Google Trends data works, see: Using Google Trends data for research? Here are 6 Questions to Ask, Galen Stocking and Katerina Eva Matsa, Pew Research Center, (April 2017).

81 Note that Google trends does not provide data for Cape Town, Johannesburg or Sydney per se, but for the Western Cape, Gauteng and New South Wales respectively. All three provinces are dominated by the three cities, and can be used as fair proxies.

Cape Town – African city of opportunity 61 Economics

As countries rapidly urbanise, their cities become their most important economic engines, generating the majority of national output. But even as they dominate at home, cities face increasing competition for talent, business and investment from abroad. The final section of our report considers how cities compete across three indicator dimensions: Economic clout, Ease of doing business and Cost.

62 PwC Cape Town – African city of opportunity 63 Score

London 1 157

New York 2 148

Beijing 3 (1) 140

San Francisco 4 132

Madrid 5 125

Sydney 6 121

Shanghai 7 (2) 116

8. Economic clout Paris 8 114

Singapore 9 111

Amsterdam 10 106

Stockholm 10 106

Kuala Lumpur 12 (3) 103

Dubai 13 102

Hong Kong 13 102

Toronto 13 102

Milan 16 95

No city is an island82, all compete and recently rated South Africa 85th in Tokyo 17 94 trade in global markets. Economic clout the world for Business impact of rules Seoul 18 92 is a measure of a city’s economic size, on FDI, behind Nigeria, Guinea and Chicago 19 88 vigour and attractiveness relative to the Bangladesh. others. Los Angeles 19 88 FDI is also driven by local Ease of doing Unsurprisingly, Cape Town ranks near business factors (see next section), good Mexico City 21 (4) 84 the bottom of this study for Economic governance, shovel-ready, projects Mumbai 21 (4) 84 clout, along with most of the other and active promotion, which are the Jakarta 23 (6) 81 middle-income country cities (MICCs), responsibility of many different city though ahead of those in South departments. This means that as well Johannesburg 24 (7) 80

America. as depending on national and global Moscow 24 (7) 80 headwinds, investment also relies on The same is true for Number of Global collaborative city government. Berlin 26 75 500 headquarters. Although Cape Lagos 27 (9) 68 Town is home to more than 25 of the In the past year Cape Town has made companies listed on the Johannesburg strides in this area by launching Invest São Paulo 28 (10) 59 83 Stock Exchange (JSE), African Cape Town, an investment promotion Cape Town 28 (10) 59 companies remain under-represented initiative which aims to develop in global markets with only three South a business brand narrative that Bogotá 30 (12) 57 African firms making the top 500 in emphasises the unique characteristics Rio de Janeiro 31 (13) 47 2016.84 of the city-region. High-income countries Cape Town Attracting investment In this study, Cape Town scores poorly Middle-income countries overall for Attracting Foreign direct As public sector finances are squeezed, investment but initiatives like Invest Working solutions cities will increasingly rely on private Cape Town may already be changing sector and donor funding to co-finance this. In 2017, the Financial Times’ fDi Cities must also create their own infrastructure and other socio-economic intelligence division rated Cape Town prosperity, by generating productive spending. Attracting foreign direct one of the Global Cities of the Future, employment. In this regard Cape investment (FDI) is therefore a key goal ranking its FDI strategy 21st in the Town’s scores are mixed, mainly due of many cities, and its success depends world.85 Furthermore, the outcome to historical factors. South Africa’s on many factors. Many of these – of the recent presidential election is past apartheid governments vastly national political stability, institutions, expected to have a positive impact on under-invested in education and exchange rate – are outside of cities’ FDI in South Africa.86 opportunity for the majority of the control. The World Economic Forum population, leading to unemployment rates that have been stubbornly high for 82 Except Singapore 85 Global Cities of the Future 2016/17 generations (see page 67). Winners, Top 25 FDI strategy. fDi (2016) 83 Cape Town Tech Centre Infographic 2017, Silicon Cape Initiative (2017). 86 Investment decisions: Why South Africa, Although Cape Town’s unemployment and why now? Forward-looking scenarios and youth unemployment rates are 84 Global 500 List, Fortune (2016). for the Ramaphosa presidency (2018– 2022). PwC, March 2018 64 PwC Economic clout Number of Global 500 Employment growth Financial and business Attracting FDI Productivity Rate of real GDP growth headquarters services employment

1 3 10 3 3 8 8

2 5 6 9 7 2 15

3 (1) 1 (1) 17 (8) 5 (1) 5 (2) 23 (5) 1 (1)

4 18 2 6 26 1 7

5 10 4 11 14 17 11

6 14 9 12 11 12 13

7 (2) 7 (2) 27 (11) 16 (4) 2 (1) 21 (3) 3 (3)

8 3 29 4 9 7 26

9 18 8 20 1 15 19

10 14 23 1 15 11 22

10 18 20 7 26 5 10

12 (3) 23 (9) 3 (2) 19 (6) 20 (6) 19 (1) 5 (5)

13 27 13 28 4 9 9

13 12 18 22 6 14 18

13 10 15 8 16 13 28

16 23 19 2 18 10 25

17 2 28 23 12 6 27

18 6 26 18 16 18 16

19 14 21 13 29 4 23

19 27 11 21 28 3 14

21 (4) 14 (6) 14 (6) 27 (10) 21 (7) 20 (2) 12 (7)

21 (4) 9 (4) 24 (10) 29 (11) 13 (5) 31 (13) 2 (2)

23 (6) 18 (7) 12 (5) 30 (12) 23 (9) 24 (6) 4 (4)

24 (7) 27 (11) 5 (3) 10 (2) 24 (10) 26 (8) 20 (9)

24 (7) 8 (3) 30 (12) 15 (3) 7 (3) 22 (4) 30 (12)

26 23 25 14 18 16 21

27 (9) 27 (11) 1 (1) 31 (13) 29 (12) 30 (12) 6 (6)

28 (10) 12 (5) 31 (13) 24 (7) 10 (4) 25 (7) 31 (13)

28 (10) 27 (11) 7 (4) 17 (5) 31 (13) 27 (9) 24 (10)

30 (12) 23 (9) 16 (7) 25 (8) 25 (11) 29 (11) 17 (8)

31 (13) 18 (7) 22 (9) 26 (9) 22 (8) 28 (10) 29 (11)

Rank out of 31 cities (rank out of 13 middle-income country cities, if applicable) routinely ten points below the national Expanded Public Works Programme unemployment legacy will take many average, and the lowest of all the SA (EPWP) and other municipal projects – years, but using the government’s metros, official unemployment is still far more than the country’s other seven spending power for such schemes is over 20% – very high by international metros combined.88 often the best way to start. standards.87 These jobs are often low-pay and At the other end of the income scale, This study finds that although the city low-productivity, but they provide the city punches above its weight continues to enjoy Employment growth, opportunity to citizens who would for Financial and business services this is not having the desired feed otherwise be unemployed, and help employment. Cape Town has long been through effect on Productivity or Rate of to create a culture of employment home to many of the continent’s biggest real GDP growth. in the city. Tackling South Africa’s insurers and has more recently become a hub for asset management, venture This may be an unavoidable 88 Metros Q3 Performance Indicators Master capital and other professional services consequence of redressing the past. In File 2016 - 17, Service Delivery and Budget firms, whose well-educated staff 2016/17, Cape Town reports creating Implementation Plans, National Treasury (2017). Note that this figure is for budgeted enjoy Cape Town’s unique setting and more than 100,000 jobs through the EPWP jobs to be created in the year lifestyle. 2015/16, as reported to National Treasury. 87 Quarterly Labour Force Survey, Financial Actual figures will be available in the Quarter 3, Statistics South Africa (2017). coming months Cape Town – African city of opportunity 65 66 PwC Fig. 15 Unemployment in the big cities

70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0 Cape Town eThekwini Ekurhuleni Johannesburg Tshwane AV8*

Official unemployment Youth unemployment SA Youth unemployment UN definition (15-64) definition (15-34) definition (15-24)

Note: Youth unemployment in South Africa is defined as people between 15-34; most countries use the United Nations definition of 15-24.

Source: Quarterly Labour Force Survey, Q3 2017, Statistics SA (2017)

*Average for the eight South African metros

Cape Town – African city of opportunity 67 Score Ease of doing business

Singapore 1 217 1

Hong Kong 2 213 2

London 3 201 3

Toronto 4 188 4

Stockholm 5 179 5

Paris 6 169 6

New York 7 163 7

9. Ease Seoul 8 162 8

Los Angeles 9 158 9 of doing Kuala Lumpur 9 (1) 158 9 (1) Chicago 11 152 11

Berlin 12 151 12 business Amsterdam 13 149 13 San Francisco 13 149 13

Sydney 15 140 15

While all of the Cities of Opportunity Tokyo 16 138 16 indicators are potential determinants 17 of foreign investment, Ease of doing Madrid 17 134 business is one of the areas watched Milan 18 119 18 most keenly by governments for two Cape Town 18 (2) 119 18 (2) reasons. Johannesburg 20 (3) 117 20 (3) First, it is an area where government Dubai 21 110 21 intervention can work quickly – local regulations and taxes are easier and Mexico City 22 (4) 107 22 (4) quicker to change than road networks Bogotá 23 (5) 104 23 (5) or education levels. Second, it is widely accepted that such changes have a real Moscow 24 (6) 93 24 (6) and relatively fast impact on foreign- Beijing 25 (7) 87 25 (7) direct investment (FDI).89 São Paulo 26 (8) 80 26 (8)

For cities in lower and middle- Rio de Janeiro 27 (9) 78 27 (9) income countries, this is an area where real progress can be made Shanghai 28 (10) 67 28 (10) without significant cash outlays. The Mumbai 29 (11) 60 29 (11) development of Hong Kong, Singapore Jakarta 30 (12) 57 30 (12) and Dubai – all of which use English law to a large extent – are good Lagos 31 (13) 23 31 (13) examples. High-income countries Cape Town Who sets the rules? Middle-income countries

The conundrum for cities is that many scores moderately well in national ease since. However, this course might of the determinants of Ease of doing of doing business rankings – 82 out of be altered by the recent election of 90 business are controlled at the national 190 in the World Bank list and 61 out Cyril Ramaphosa as South Africa’s level – for example, corporate tax of 137 according to the World Economic President, a move which was welcomed 91 levels, the rule of law and shareholder Forum. by both business and the Rand. PwC protection. For 2018, South Africa analysis points to favourable economic These scores have deteriorated outcomes – including a doubling of significantly in recent years. In 2006, GDP growth in his first term – if the 89 The World Bank (Does Doing Business when the World Bank study was matter for Foreign Direct Investment, John new President delivers the ethical introduced, South Africa ranked 92 Anderson and Adrian Gonzalez (2013)) leadership he campaigned on. draws strong links between the two, 28th; it has declined in every year while Piwonski (Does the ‘Ease of Doing Business’ In a Country Influence its Foreign 90 Economy Rankings, Doing Business 2018, Direct Investment Inflows?, unpublished World Bank (October 2017). paper, Bryant University (April 2010)) 92 Investment decisions: Why South Africa, shows that by increasing its Ease of Doing 91 The Global Competitiveness Report 2017– and why now? Forward-looking scenarios Business rank by one level, a country can 2018, Klaus Schwab & Børge Brende, for the Ramaphosa presidency (2018– bring in over $44 million per annum as FDI. World Economic Forum (2018) 2022). PwC, March 2018 68 PwC Ease of starting a Resolving insolvency** Ease of entry: Number Number of foreign Level of minority Operational risk climate* Workforce management Tax efficiency business** of countries with visa embassies and shareholder protection** risk waiver * consulates

2 13 2 13 2 2 2 3

4 16 3 10 1 1 6 2

11 10 6 1 3 11 4 9

1 8 19 18 5 4 3 10

9 12 13 8 18 4 9 4

8 14 18 2 8 13 13 11

16 3 21 12 13 6 1 21

6 7 4 7 11 18 16 25

15 3 21 17 13 6 5 18

5 (1) 20 (3) 1 (1) 11 (3) 4 (1) 16 (1) 18 (1) 23 (8)

14 3 21 22 13 6 7 18

24 2 10 5 24 12 14 14

7 9 7 28 28 6 10 12

13 3 21 25 13 6 8 18

3 11 26 20 27 2 12 15

22 1 17 4 18 13 15 28

21 15 15 9 17 15 17 13

12 18 14 15 11 19 21 27

19 (4) 21 (4) 11 (5) 28 (11) 8 (4) 20 (2) 23 (5) 7 (3)

18 (3) 21 (4) 11 (5) 31 (13) 8 (4) 20 (2) 23 (5) 7 (3)

17 29 25 25 22 16 11 1

20 (5) 17 (1) 16 (7) 16 (5) 25 (9) 23 (5) 27 (9) 5 (1)

23 (6) 19 (2) 5 (2) 24 (9) 7 (3) 20 (2) 30 (12) 24 (9)

10 (2) 27 (10) 27 (9) 6 (2) 29 (11) 30 (12) 28 (10) 6 (2)

26 (8) 23 (6) 29 (11) 3 (1) 30 (12) 23 (5) 19 (2) 16 (5)

31 (13) 25 (8) 7 (3) 21 (7) 18 (6) 26 (8) 22 (4) 26 (10)

30 (12) 25 (8) 7 (3) 25 (10) 18 (6) 26 (8) 25 (7) 22 (7)

25 (7) 23 (6) 29 (11) 23 (8) 30 (12) 23 (5) 20 (3) 16 (5)

29 (11) 31 (13) 29 (11) 19 (6) 5 (2) 28 (10) 26 (8) 29 (11)

28 (10) 28 (11) 20 (8) 14 (4) 22 (8) 28 (10) 29 (11) 30 (12)

27 (9) 30 (12) 28 (10) 30 (12) 25 (9) 31 (13) 31 (13) 31 (13)

Rank out of 31 cities (rank out of 13 middle-income country cities, if applicable)

In this study, Cape Town’s score for Ease which is testament to the strength of However, it should be noted that even of Doing Business is also middle-of-the- South Africa’s courts and its King (IV) under visa waiver conditions, onerous road: 19th out of 31 overall and second corporate governance code.93 regulations can impact on both the Ease out of the 13 middle-income countries. of doing business and – notably for Cape Another national competency that Town – tourism. A recent tightening of The city’s highest score is for Tax scores highly is Ease of entry – a rules for children entering the country efficiency, painting the South African measure of the number of countries was estimated to have cost the country Revenue Service (SARS) in a favourable with visa waivers – in which Cape Town R1.4 billion in tourism alone94 – much light compared with its high-income places above high-income cities such as of which drives Cape Town’s economy country counterparts. Paris, Toronto and Stockholm. (see City gateway). Similarly, Cape Town scores well 93 The King (I-IV) corporate governance for Minority shareholder protection, codes have been referred to as “the most effective summary of the best international practices in corporate governance” – Management: Fresh perspectives, Steve 94 Child Visa Impact Biggest on SADC Banhegyi, Pearson Education South Africa Countries, Tourism Business Council of (2007), p. 317. South Africa (June 2015). Cape Town – African city of opportunity 69 This episode highlights the importance Cape Town scores moderately in this of communication between city and study for Ease of starting a business, and national governments. Resolving insolvency. These indicators are taken from the 2015 World Bank Risk and reward study that compared all of South Cape Town also scores well in terms Africa’s metros, in which Cape Town of Operational risk climate, coming came out top (see figure 16 below). second out of the MICCs. This variable In terms of Number of foreign embassies is critical to the Ease of doing business and consulates, Cape Town is near the since it is made up of 10 individual bottom of the list – most diplomats are risk criteria – including political, legal based in the administrative capital, and macroeconomic – which seriously Pretoria. Nevertheless, given its status impact companies’ likelihood of success as the seat of Parliament, Cape Town in a city. is likely to gain many of the benefits However, the city scores less well implicit in this variable, such as close for Workforce management risk, an business-government relations. indication that the city’s labour supply is poor by international standards. This reflects poor education standards – only a third of citizens have finished high school – as well as the fairly rigid labour laws and high propensity for industrial action that are a characteristic of doing “In terms of physical infrastructure, the standard of buildings and business in South Africa. roads in cities such as Cape Town are comparable with those in Western Europe. In addition the cost of living is relatively low with Nevertheless, Cape Town is making the cost of living in Johannesburg estimated to be 56% lower than strides in attracting global business that in London, Cape Town 62% lower than London, and Durban in certain key industries. Recent 67% lower than London” successes have included the film industry, manufacturing and business Nelson Hall/BPESA* process outsourcing (BPO): Cape Town accounts for two-thirds of all BPO jobs 95 Picture taken by Wessel Van Wyk in SA’s big cities. *Analysis of South Africa as a BPO Delivery Location, Business Process Enabling South Africa, Nelson Hall (2015).

95 Analysis of South Africa as a BPO Delivery Location, Business Process Enabling South Africa, Nelson Hall (2015).

Fig. 16 Doing business: Scores for South Africa’s big fivemetros

Overall Rank 90 80 1 3 2 6 70 9 60 50 40 30 20 10 Starting a business Dealing with construction Getting electricty Registering property Enforcing contracts Average doing business 0 permits score

Cape Town eThekwini Ekurhuleni Johannesburg Tshwane

Units: ‘Distance to frontier’ where 100 = global best practice Source: Doing Business in South Africa 2015, World Bank (2015)

70 PwC “Our members consistently rate Cape Town as a great place to do business. The city is well connected, Picture taken by Wessel Van Wyk efficient and is becoming known as a continental tech hub. From a bilateral UK/SA perspective, due to a long history of engagement, both socially and commercially, the ease of doing business is significant. It’s also an easy sell to staff who can experience a quality of life amongst Cape Town’s beaches, mountains and wine farms that is hard to match in either Africa or the UK!”

David Dawson, Chief Executive, British Chamber of Business in Southern Africa

Cape Town – African city of opportunity 71 Score

Johannesburg 1 (1) 143

Cape Town 2 (2) 137

Toronto 3 129

Los Angeles 4 127

Berlin 5 126

Dubai 6 123

Kuala Lumpur 7 (3) 120 10. Cost Chicago 8 118 Madrid 9 115

Bogotá 10 (4) 110

Jakarta 11 (5) 104

São Paulo 12 (6) 102

Singapore 12 102

Seoul 14 100

Hong Kong 15 98 One of the downsides of rapid However, it is not all rosy for residents: urbanisation is its effect on the cost The city’s scores for Purchasing power Amsterdam 16 93 of living and working in cities: The and Affordability of rent are low Sydney 16 93 more people move in, the more cost (though it does well among MICCs). increases. This is a critical factor in This is to be expected – both indicators Mexico City 18 (7) 87 the relocation decision for workers, reflect the low wages, which are San Francisco 19 85 businesses, and students alike. a corollary of a low cost of doing Mumbai 19 (8) 85 Increased costs are seen most clearly business. in housing where many cities around Stockholm 19 85 The fact that Cape Town does well for the world cannot match supply with Lagos 22 (9) 84 demand, but the cost of city living is Cost of living but badly for Affordability also affected by other variables, which of rent will come as no surprise to Rio de Janeiro 23 (10) 81 residents. The global cost of living this indicator explores. Milan 24 79 database Numbeo reports that rent Cape Town’s overall score for Cost is 23% higher in Cape Town than in Tokyo 25 71 96 outperforms all other cities barring its Johannesburg, a trend that looks set New York 26 70 local partner Johannesburg, making it to continue: TPN Credit Bureau reports London 27 68 the city’s best-performing area in this average rental increases in 2017 of 13% study. for the Western Cape but only 5% for Paris 27 68 Gauteng.97 The city also earned the top global Moscow 29 (11) 66 position for Cost of business occupancy In the medium-term, it is unlikely that Shanghai 30 (12) 61 and was in the top five for Corporate these trends will discourage educated Beijing 31 (13) 51 total tax rate, both important in foreigners from choosing to locate in attracting footloose foreign businesses. Cape Town – housing costs remain High-income countries Cape Town Cost is a major driver of competitive competitive globally (see page 74) Middle-income countries industries such as Business Process and expats are, on the whole, likely Outsourcing (BPO) jobs (see also Ease to be less price-sensitive than locals. cannot afford to live, work and interact of doing business). However, more than 95% of Cape in Cape Town, they cannot start the Town’s workforce is South African city’s businesses of the future. Cape Town does well for Cost of living, born and pricing them out of the city There are also political consequences. bettered by only Mumbai and Bogotá, may have economic as well as social Several high profile groups such as and is in the top ten for Personal tax. consequences.98 If local innovators Both are critical for attracting the Ndifuna Ukwazi and Reclaim the City talent who will shape the city’s future 96 Cost of Living Comparison between Cape have organised protests at development workforce. Add to this the fact that Town and Johannesburg, Numbeo Online, sites in the past year, decrying many of Cape Town’s most alluring (November 2017). gentrification and the lack of affordable features are free – the beach, the 97 Residential Rental Monitor 2017 Q1, South housing close to the city centre. mountain, the wildlife – and it becomes Africa Rental Monitor, TPN Registered Meanwhile, people continue to move clear that young educated professionals Credit Bureau (May 2017). to the Mother City, often settling in the can afford a quality of life in Cape Town 98 Community Survey, Statistics South Africa only place available: Townships. The that is hard to achieve in many other (2016). State of South African Cities Report places in the world.

72 PwC Cost Corporate total tax rate Personal tax Cost of business Cost of Living Purchasing Power Affordability of rent occupancy

1 (1) 5 (1) 9 (6) 2 (2) 7 (7) 17 (1) 9 (2)

2 (2) 5 (1) 9 (6) 1 (1) 3 (3) 19 (2) 18 (5)

3 3 21 5 20 8 6

4 12 25 11 14 1 2

5 19 23 3 16 4 1

6 1 1 17 15 18 17

7 (3) 11 (5) 11 (8) 9 (4) 6 (6) 24 (6) 11 (3)

8 15 27 4 19 5 4

9 21 18 8 13 14 3

10 (4) 31 (13) 4 (2) 6 (3) 2(2) 25 (7) 14 (4)

11 (5) 7 (3) 2 (1) 14 (6) 4 (4) 30 (12) 31 (13)

12 (6) 29 (11) 6 (3) 16 (8) 11 (11) 20 (3) 8 (1)

12 2 15 24 27 9 13

14 9 5 20 21 21 16

15 4 3 30 18 15 24

16 13 31 7 24 12 12

16 18 22 21 30 3 5

18 (7) 23 (7) 13 (10) 10 (5) 5 (5) 27 (9) 27 (9)

19 14 25 18 26 2 22

19 (8) 24 (8) 8 (5) 15 (7) 1 (1) 29 (11) 30 (12)

19 20 28 13 25 11 10

22 (9) 10 (4) 14 (11) 19 (9) 12 (12) 30 (12) 23 (7)

23 (10) 30 (12) 6 (3) 22 (10) 10 (10) 22 (4) 21 (6)

24 26 30 12 22 16 7

25 22 16 27 23 13 20

26 16 29 23 29 6 19

27 8 19 31 31 10 25

27 25 24 25 28 7 15

29 (11) 17 (6) 12 (9) 28 (12) 17 (13) 23 (5) 29 (11)

30 (12) 27 (9) 17 (12) 26 (11) 9 (9) 26 (8) 26 (8)

31 (13) 28 (10) 20 (13) 29 (13) 8 (8) 28 (10) 28 (10)

Rank out of 31 cities (rank out of 13 middle-income country cities, if applicable)

2016 found that Cape Town was the regime. Before 1994, poor housing focused on long-term transit-oriented only city in South Africa where the was located far outside of cities with development (TOD). Such ‘outcome- proportion of people living in informal equally poor transport links. Although based’ government recognises the settlements had increased in the transport has been improved, the city’s interdependence of departmental goals previous five years.99 urban form remains ‘mono-modal’ – and refocuses priorities and funding on with the majority of jobs in the city broader citizen outcomes.100 The city and provincial government centre and the majority of housing in are acutely aware of the housing the periphery. problem. In solving it they face similar problems as other global cities – lack In 2017, recognising that solving this 100 Also called ‘transversal management’, of investment, regulatory complexity, task is both a housing and a transport city and national governments are and nimbyism – as well as the unique issue, the City of Cape Town created implementing similar schemes across the challenge of overcoming the spatial a Transport and Urban Development world. For example, in Manchester, UK, health and social care services are being legacy left by South Africa’s apartheid Authority – a merger of departments, merged to create a seamless care system which will improve patient outcomes and 99 State of South African Cities Report 2016, save costs. South African Cities Network (2016). Cape Town – African city of opportunity 73 One solution the city has turned to is legislation: It plans to declare the whole Box 9 city a restructuring zone, allowing any suitable land to be used for social Housing housing.101

It is also using its balance sheet – The tipping point several multi-billion rand mixed use In most cities the megatrend of rapid urbanisation looks set to intensify, but housing developments are underway this will be most pronounced in middle and lower-income countries: According or planned.102 Many of these have to the World Bank and the IMF, 96% of urban growth between now and 2030 been designed explicitly to avoid the will take place in the developing world.104 problems of the past, by requiring a significant proportion of properties This is partly due to the fact that low and middle-income countries have higher to offer capped, affordable rents in national population growth rates and, usually, lower urbanisation levels to multi-storey buildings in central areas, begin with. But there are signs that the big cities of the developed world may recognising the role of densification in have reached a ‘tipping point’, as the cost of living and housing increase and creating productive, liveable cities.103 technological and social trends make remote-working more achievable.

In the US, 2016 census data shows that population growth in the urban centres 101 Cape Town Municipal Spatial of big metros slowed for the fifth consecutive year. Net domestic in-migration Development Framework (MSDF) 2017- to the New York City metro area is down by 900 000 since 2010.105 2022, City of Cape Town (July 2017). In South Africa, on the other hand, 3 700 000 more people live in the eight 102 For examples, the Harbour Arch metros than a decade ago, with urban population growth stable at around 2% development and the Foreshore. per annum. 103 Many African cities are poorly designed and sprawl, which impacts transport Among the many differences between Cape Town and New York is the cost of systems but also affects economic growth housing: In 2017, the average house price in the Cape Town CBD was R 2 300 as the city misses out on agglomeration 106 effects and economies of scale – see for 000, or $160 000. In Manhattan, in the same year, the average apartment 107 example: Africa’s Cities: Opening Doors to cost $2 200 000m – 14 times more. the World, Lall, Somik Vinay, Henderson, J. Vernon and Venables, Anthony J, World House prices continue to rise fast across urban South Africa and the size of Bank (2017). the current gap underlines the competitive cost advantage Cape Town – and Johannesburg – enjoy over global megacities. However, although New York is in the bottom five for Cost, as this study strives to highlight throughout, several factors are needed to be a City of Opportunity – and New York leads Cape Town in the other nine indicators.

In addition, while New York’s net domestic migration is down by almost a million since 2010, its net international migration increased by almost the same amount.

This may paint a picture of the rich-world megacities of the future; still large, prosperous, and slowly growing, but inhabited fleetingly by new migrants and well-educated young professionals yet to start families, while the rest of the country moves to the suburbs and smaller cities to stretch their legs and ease their wallets.

While New York may be reaching this ‘tipping point’, it is likely that Cape Town has many years of continued urbanisation, growth, and rent rises ahead. And while it must continue to try to attract foreign talent and investment, Cape Town’s medium-term population growth will be driven by South Africans. In fact, between 2011 and 2016, the city’s foreign-born population actually decreased, from more than 200 000 (5.4%) to 150 000 (3.8%).108

104 Global Monitoring Report 2013 : Rural-Urban Dynamics and the Millennium Development Goals, World Bank and International Monetary Fund (2013)

105 Why so Many Americans are Saying Goodbye to Cities, Derek Thompson, The Atlantic (4 April 2017).

106 The Wealth Report: The Global Perspective on Prime Property and Wealth, 11th Edition, Knight Frank (2017).

107 Manhattan Sales 3Q 2017, Elliman Report, Millar Samuel Inc (2017).

108 Community Survey, Statistics South Africa (2016); Census 2011, Statistics South Africa (2011).

74 PwC “Where people live matters. The dire need for housing for Cape Town’s most vulnerable households is the single biggest challenge we are facing as a local government today. We are therefore doing all we can to expedite the development of inclusionary housing and to ensure that housing opportunities for lower-income families are situated on well-located land, close to work opportunities and public transport. In this sense we are leveraging City-owned assets to achieve spatial transformation, and we are moving towards a Precinct Development Approach which promotes densification in well-located precincts.”

Cllr Brett Herron, City of Cape Town’s Mayoral Committee Member for Transport and Urban Development

Cape Town – African city of opportunity 75 Implications

76 PwC Cape Town – African city of opportunity 77 Implications

Working together to build a better Cape town

These recommendations are primarily stories share a theme: Commitment Resilience and sustainability for the city and provincial government as and collaboration. Crime and education the bodies elected to govern the city, but were made major strategic priority Make resilience about more than just they also apply to national government, areas and delivery was driven actively water business and civil society, all of whom with advanced data collection and The megatrend of climate change and have an interest in the success of Cape regular reporting. Cape Town has resource scarcity means that natural Town. the power and the ambition to be the disasters such as the drought Cape catalyst for such a change, as it has This study has uncovered many areas Town is currently experiencing will shown with its success in tackling become more common in cities across of strength, but also areas where Cape unemployment. Town can improve. Some of these are the world. Cape Town’s water resilience difficult, or largely uncontrollable: The Digital city plan is progressing rapidly, with the longstanding problems of inequality demand side responding especially well of income, education and opportunity Embrace technology and innovation – households have halved their usage will not be solved overnight, but can and don’t be scared to experiment in the past year. But this may not be enough. Although the taps are likely to be alleviated. Many others have more Cape Town’s use of its Enterprise straightforward solutions. stay on this year, the drought will affect Resource Planning (ERP) is regarded businesses both large – farmers, SAB As well as observing patterns in the as one of the best examples of the Miller’s Newlands Brewery, – and small scores, we have used our Future software’s deployment in the world. – car washes and swimming pools, as Cities framework to categorise these But ERP systems are a long way from well as tourism. implications (see bold italics). This the new technologies of the fourth approach (see page 15) involves ten industrial revolution. When it comes São Paulo provides a cautionary steps that cities can follow to achieve to many of these ‘Smart City’ solutions, tale: it ranks sixth for Water-related three broad citizen outcomes. there is no set playbook. Cities across business risk but since this study was the world are experimenting with concluded, it has been gripped by its Data-led delivery + Collaboration technology and applications to see worst drought in 80 years.110 Cape which one works best for them. Cape Town should assess its resilience to Make education and safety top Town has all the right ingredients to withstand other natural disasters. For priorities, even though they are become a test bed for new smart city example the city sits on the Milnerton complex innovations, yet the City has yet to fault, meaning earthquakes are a ‘rare 111 The City of Cape Town has full control launch an official citizen engagement but very real threat’. And resilience over neither education nor safety. app, and its use of the Internet of is about much more than being able to Nevertheless, this study finds that Things (IoT)and other smart city withstand environmental damage. As both areas are implicated time and solutions is limited. The majority of set out on page 49, the City also needs time again. Some cities, such as Seoul, activities that a city carries out day to to constantly assess its ability to stand have made great progress in recent day can be improved with technology – shocks of the organisational, social and years thanks to national education there might not yet be ‘an app for that’ economic type. policy changes. Other cities have taken – but there could be. In the fast-moving matters into their own hands. When it digital world, cities cannot apply the comes to policies, New York went from traditional ways of doing business and being synonymous with crime in the should not be scared to fail along the 110 Lessons from São Paulo’s Water Shortage, Sandra Postel, National 1990s to be rated the 10th safest city way; it might be the birth of the next success. Geographic (March 2015). in the world in 2015.109 Both of these 111 Dr Chris Hartnady, Umvoto Africa, quoted in: Major Quake in SA just a Matter of 109 Safe Cities Index, The Economist (2015) Time?, IOL (5 March 2010). 78 PwC Power and incentives + Data-led focusing on customer-centric solutions which could be moved from paper and delivery like fast 4G/5G networks, visible premises into people’s pockets. This security and apps to help people get might start with a citizen engagement Learn from the best around, the city can use the success of app that allows citizens to view and tourism as a springboard for the rest of pay bills, report potholes, or check the This study is full of success stories that the economy. latest dam levels. are replicable: tech-enabled schools in Kuala Lumpur, Ease of doing business Collaboration + Transversal Such a platform could be updated to in Singapore, water resilience in Los management host any number of city functions and, Angeles, recycling in Mumbai. in doing so, lead to a re-imagination Collaborate widely of the citizen-city relationship. As well Cities are often lured into as real-time warnings about fires and thinking that they are prevented City governments cannot control location-specific transport updates, by legislation or funding from much of what happens within their the app could allow the user to ‘rate’ doing things differently. boundaries – but they have more water engineers like TripAdvisor, influence than anyone else. This study or even to hail the police like Uber. These examples, and many others, uncovers many examples of the city Neither is inclusion any longer an show that there are a host of innovative government working with others to insurmountable problem. Around ways to solve even the most complex achieve better outcomes, whether with two-thirds of citizens have access to the of problems, often without legislating property-owners in City Improvement internet on a mobile device,112 and at little cost. Cape Town should Districts, with provincial government to many study the innovative strategies, smart encourage safe driving, or with national of the rest have handsets with basic regulations and incentives that leading government to encourage investment functions like USSD, and data costs can Cities of Opportunity use to make life promotion. be overcome by partnering with the better for their citizens. networks. Several South African banks There have also been great have recently demonstrated this by One example the city could prioritise is improvements when city departments providing online banking access with land reform. The City owns vast tracts work together, as shown by the EPIC no data costs.113 of land, both greenfield and brownfield, emergency response system, and and the need for affordable housing the Transit-Oriented Development Urban intelligence in the city is very real, with multi-year approach. But there are many more Big data to solve big problems waiting lists for social housing. opportunities on the horizon, whether in the devolution of powers from The city government cannot single- One of the biggest benefits of increased PRASA and Transnet, or in working handedly transform housing supply; citizen engagement is increased data, to simplify business and tourist visas. this requires private sector involvement but even without citizen engagement As with innovation, a culture of which, along with promotion and apps, the City of Cape Town holds more collaboration does not always come active collaboration could be improved data on its four million residents than naturally to government, but it often by simplifying the city’s complex land anyone else. If data is the new oil, Cape leads to the best solutions regulations, many of which have not Town sits on an unexploited oilfield. been reviewed in years. As with digital technology, it is hard to Citizen centricity + Digital city think of a service the city delivers that Collaboration + Citizen-centricity Citizen-centric government is a win- could not be improved with better use win of data and analytics: Build on the success of tourism The most powerful form of • Optimised fleet maintenance and Through initiatives such as Invest Cape collaboration is with citizens. transport routes; Town and Wesgro, the city is building Understanding their needs helps to a strong brand and has a clear idea • people analytics to improve staff ensure public funds are spent efficiently of what the region should be known engagement; – for example sending bills via email. for, including technology, business • mining big data to close gaps in Being able to change behaviours – process outsourcing, ecotourism and billed revenue; whether it’s carpooling, recycling or wine. Since the FIFA World Cup in using less water – changes outcomes. 2010, tourism in particular has gone • predictive analytics to provide more Inviting citizens to use city data openly from strength to strength, with airport efficient, tailored basic services. may result in the solving of a problem passengers 24% up year on year and thought too difficult to solve, or the a succession of international travel discovery of unknown risks. awards – but an equivalent rise in foreign direct investment or educated Citizen-centric government does talent has not yet followed. Government not require technology, but it has 112 Community Survey, Statistics South Africa (2016). and businesses should challenge greatly changed the dynamic. The city themselves to think: “What would I currently has multiple, distinct points 113 Many South African banks now subsidise remember if I came here on holiday?” By of contact with its citizens, most of all data costs on their apps

Cape Town – African city of opportunity 79 Box 10 Collaboration

City governments do not have total control over city outcomes

• No city is an island*, and no city government has the power to change everything within its borders – but they have more influence than anyone else. • The figure shows that the 10 Cities of Opportunity outcomes are affected by five ‘influencers’ in different, overlapping ways. For example, national competencies such as education levels, immigration rules, political and regulatory stability and infrastructure such as airports and national highways. • Achieving genuine citizen satisfaction involves these influencers working together in a deliberate, coordinated manner. PwC research shows that this is a key success factor for cities.** • However, government is often siloed and culture can be difficult to change. • A successful strategy can be to assign an organisation to be responsible for bringing together different groups with shared interests in the city’s success. Examples include London First, the Partnership for New York City, the Amsterdam Economic Board and Invest Cape Town.

Influencers Outcomes

The City • City Government • City Institutions • City SOE / corporations

The State • National / Provincial Government • National Institutions (Courts, Tax) • SOEs

The People • Individuals • Companies (domestic, foreign) • NGOs, Academia & Media • Investors (local)

The Place • Natural assets – geography, resources • Culture & history (innovation etc.) • Economic development

The World • Investors (foreign) City • Tourism & Trade (customers) Boundaries • Foreign Governments and IDIs

Despite a lack of control, citizens expect city governments to deliver these outcomes

* Except Singapore ** See PwC Reports: iUrban – Innovative city strategies for delivering sustainable competitiveness, PwC (2014); Making it happen, PwC (2011)

80 PwC Data-led delivery People and culture Urban Finance + Infrastructure and transport Actively drive data-led delivery Attract and retain the best people Build on strong foundations City administrations are often elected As well as attracting foreign talent to on the basis of ambitious visions but Cape Town, government must also Although none of the indicators in fail to implement them, eroding trust in ensure that it attracts and retains the this study directly relate to the city’s government. The gap between the two best talent itself. The City of Cape Town balance sheet or finances, our Future is filled by focusing relentlessly on what alone employs almost 30,000 people, Cities model recognises that these are has recently been termed ‘the science their job satisfaction translates directly critical building blocks for success in of delivery’.114 Many governments – into citizen satisfaction. As the future citizen outcomes. including the Western Cape – have of work changes, the public sector implemented Delivery Support Units must keep up with what the private Unlike many African cities, Cape whose sole focus is to drive delivery sector is increasingly offering. This Town has a reputation for sound in a handful of key strategic priority is twofold: the future of work is both urban finance and infrastructure, areas, such as education. As well as social – flexible, remote working – and consistent service delivery and open emphasising routines, people and technical: employing the skill sets of governance which have translated leadership, this approach relies heavily tomorrow.116 into success in this study: high scores on data, but not of the ‘big’ variety for Transportation and infrastructure; described above. Instead the emphasis The City of Cape Town has recently collaborative partnerships such as City is on collecting the right strategic data transformed its organisational Improvement Districts; and successful to understand the performance of structures and is in the process of public employment programmes. government and on actively using it. implementing programmes around flexible working and transversal But there is always room to do The former might involve city management. But there is an enormous more. For example: Does the city benchmarking reports (such as this amount of untapped potential in every leverage its assets to their full effect? study) or tracking outcome areas over workforce and people analytics can be Is maintenance spending in areas time, to observe the effectiveness of used to understand and improve human like water enough to ensure current different interventions. The latter relations. efficiency and future resilience? What requires data to be accessible on mobile steps could be taken today towards a devices, presented in a compelling Similarly, in the modern world of fully integrated transport system? As way, often with visual dashboards, work, there is an increasing need for Cape Town embraces new strategic and kept up-to-date. Many cities have specialist cross-governmental teams and digital city solutions, it should a ‘Mayor’s dashboard’ which senior that can support existing departments. continually revisit these fundamentals. stakeholders can use to track key These include the Delivery Support political priorities; London has gone Units mentioned above, but also teams a step further by making its Mayor’s that specialise in areas such as digital, dashboard accessible to the most senior innovation and data analytics (see stakeholder – citizens.115 Future Cities figure on page 15)

114 How to Run A Government So that 116 Workforce of the future: The competing Citizens Benefit and Taxpayers Don’t Go forces shaping 2030, PwC (2017) Crazy, Michael Barber (2016).

115 See, for example, Gangs Dashboard, Data and Statistics, Mayor of London; Public Voice Dashboards, Data and Statistics, Mayor of London.

Cape Town – African city of opportunity 81 Acknowledgements

82 PwC Cape Town – African city of opportunity 83 Acknowledgements

Thank you to the following people for their contribution

We would like to thank the following Other organisations The following individuals in PwC people for sharing their insights with us contributed to the production of this report David Green Picture provided by The City of Cape Town Interviews Core editorial team Jamie Martin City of Cape Town Dom Boyle Paul Nel Cllr. Brett Herron Jon Williams David Dawson Lance Greyling Wessel van Wyk Richard Lyon Clayton Barnes Jenny Mill Mark Coetzee Mark Rountree Catherine Ensor Mike Mulcahy Enrico Girolo Research Team Deon Cloete Tim Hadingham Colin McIlhiney

Rory Viljoen Sabrina McCotter

Lizel Steenkamp Russell Donaldson

Western Cape Government David Paterson

Penelope Tainton Design

Minister Debbie Schäfer Najma Toefy

Picture taken by Wessel Van Wyk

If you want to know more contact us

Jon Williams Dom Boyle [email protected] [email protected]

84 PwC Picture provided by The City of Cape Town

Picture taken by Wessel Van Wyk

Photography

Photography disclaimer. All photographs used in this publication have been sourced from PwC, with the exception of those provided by The City of Cape Town and Wessel Van Wyk, which we have been granted permission to use. The permission granted is for the sole purpose of this publication. The cover page photograph which has not been referenced has been provided by The City of Cape Town.

Cape Town – African city of opportunity 85 Appendices

86 PwC Cape Town – African city of opportunity 87 Appendix A

Key to the variables

1. Intellectual capital and class universities across all of their Intellectual property protection* innovation core missions - teaching, research, Leading business executives’ responses knowledge transfer and international Libraries with public access to the question in the World Economic outlook. The top universities rankings Forum’s Global Competitiveness Number of libraries within each city employ 13 carefully calibrated Report 2014-15 that asks, “In your that are open to the public divided performance indicators to provide the country, how strong is the protection by the total population and then most comprehensive and balanced of intellectual property, including multiplied by 100,000. comparisons available, which are anti-counterfeiting measures?” [1 trusted by students, academics, Math/science skills attainment* = extremely weak; 7 = extremely university leaders, industry and strong]. The 2014 edition of the Survey Top performers’ combined mean scores governments. on the math and science components of captured the opinions of over 14,000 the Program for International Student Innovation Cities Index business leaders in 148 economies between February and June 2014. Assessment (PISA) an Organisation The 2thinknow Innovation Cities™ for Economic Co-operation and index is comprised of 445 cities selected Entrepreneurial environment* Development (OECD) assessment of from 1,540 cities based on basic The Global Entrepreneurship & 15 year-olds’ academic preparedness. factors of health, wealth, population, Development Index measures Top performers are defined as those geography. The selected cities had data the ‘3A’s’ of entrepreneurial students who achieved in the top two extracted from a city benchmarking development: attitudes, aspirations proficiency levels (Level 5 and Level 6) data program on 162 indicators. Each of and activity. The index was created on the math and science portions of the the benchmarking data were scored by by the Global Entrepreneurship test. Comparable examinations are used analysts using best available qualitative and Development Institute to help wherever possible to place cities not analysis and quantitative statistics. provide better understanding of included in the OECD assessment. (Where data were unavailable, national economic development by analysing or state estimates were used). Data Percent of population with higher the contextual nature of business were then trend balanced against 21 education formation, expansion, and growth. global trends. The final index had a Number of people who have completed zeitgeist (analyst confidence) factor at least a university-level education added and the score reduced to a three- 2. Technology readiness divided by the population aged 15+. factor score for Cultural Assets, Human A university-level education is set Infrastructure and Networked Markets. Internet access in schools* equivalent to a Bachelor’s degree For city classification, these scores Leading business executives’ responses or higher from a US undergraduate were competitively graded into five to the question in the World Economic institution. bands (Nexus, Hub, Node, Influencer, Forum’s Global Competitiveness World university rankings Upstart). The top 33% of Nexus and Report 2014-15 that asks, “In your Hub (and selected Node cities of future country, how widespread is Internet The Times Higher Education World interest) final graded scores were access in schools? [1 = nonexistent; University Rankings 2014-2015 ranked by analysts based on trends over 7 = extremely widespread]”. The powered by Thomson Reuters 2-5 years. A node ranking is considered 2014 edition of the Survey captured are the only global university globally competitive. the opinions of over 14,000 business performance tables to judge world leaders in 148 economies between * Data collected at country level February and June 2014. ** Data based on country’s most populous city

88 PwC Broadband quality score of the location. The software design Incoming/ outgoing passenger flows index is based on an assessment of 120 Based on millions of recent test Total number of incoming and outgoing quality competitiveness indicators. results from Pingtest.net, this global passengers, including originating, These indicators include availability broadband index from Ookla compares terminating, transfer and transit and track record in ICT, availability of and ranks consumer broadband passengers in each of the major specialised-skills professionals such connections around the globe. airports servicing a city. Transfer and as scientists and engineers, access Our overall broadband index score transit passengers are counted twice. to venture capital, R&D capabilities, encompasses the following weighted Transit passengers are defined as air software experts, quality of ICT metrics which were collated over a six travelers coming from different ports infrastructure and specialisation in month period to generate an average - of departure who stay at the airport for software development. The Multi- upload speed (40%), download speed brief periods, usually one hour, with Media Design Centre rankings are (40%), quality of connection (10%) and the intention of proceeding to their first based on an assessment of 120 quality value/cost (10%). port of destination (includes sea, air competitiveness indicators, including and other transport hubs). Mobile broadband speed the size of the location’s leisure and entertainment sector, its specialisation World Top 100 airports Based on millions of recent cellular test and track record, information results from Ookla Speedtest iOS and Each city receives a score based on technology infrastructure, quality of life Android apps, this index compares and the ranking of that city’s top airport in and skills availability. ranks cellular upload and download the World’s Top 100 Airports ranking, speeds around the globe. Each city Digital security compiled by Skytrax. The World Airport receives a score based on the rolling Awards are based on over 13 million This variable measures a city’s levels mean speed in megabits per second survey questionnaires completed by of digital security based on factors (mbps) over the previous 30 days. airline customers between May 2014 such as dedicated cybersecurity teams Only tests taken within 300 miles of and January 2015 across 550 airports (input) and the frequency of identity the server are eligible for inclusion worldwide. The survey evaluates theft (output). Input metrics measured in the index. Data were collected and travellers’ experiences across different are privacy policy, citizen awareness averaged over a three month period in airport service and performance of digital threats, public-private 2015. indicators from check-in, arrivals, partnerships, level of technology transfers, shopping, security and ICT Usage employed, and dedicated cybersecurity immigration to departure at the gate. teams. Output metrics are frequency of Ericsson’s Networked Society City identity theft, percentage of computers Airport connectivity Index 2014 measures the performance infected, and percentage with Internet of 40 cities from two perspectives: A measure of the number of routes access. Data are produced by the their maturity in information and operating from the airports servicing Economist Intelligence Unit’s Safe Cities communications technology (ICT) a city as identified by World Airport Index 2015. and triple bottom line, specifically Codes. A greater weight is given to sustainable urban development in a international destinations, but domestic connected society. The ICT usage score routes are also included so as not to 3. City gateway is based on three variables—technology penalise countries with larger land use, individual use, and public and Hotel rooms areas. market use. Within technology use, Count of all hotel rooms within each the following metrics were analysed: city. mobile phone subscriptions per 100 4. Health, safety and security habitants, number of smartphones per International tourists Road safety* capita, percentage with a computer at Annual international tourist arrivals home, and number of tablets per capita. A count of the estimated number for 100 cities collected by Euromonitor Within individual use, the following of road deaths in each country per International. Euromonitor’s figures metrics were considered: Internet usage 100,000 inhabitants. Raw figures include travelers who pass through a as a percentage of the population and are calculated by the World Health city, as well as actual visitors to the city. social networking penetration. Within Organisation based on 2013 survey public and market use, the following International association meetings data and are published in the Global Status Report on Road Safety 2015. metrics were analysed: open data A measure combining both the number and web presence, and electronic and of international association meetings Health system performance* mobile phone payments. per city in 2014 and the compound Measurement of a country’s health annual growth rate (CAGR) from Software development and multi- system performance made by 2009-2014. The meetings measured media design comparing healthy life expectancy with take place on a regular basis and rotate Combination of scores for each city in healthcare expenditures per capita between a minimum of three countries. fDi magazine’s Best Cities for Software in that country, adjusted for average Figures provided by the International Development and the Best Cities for years of education (years of education Congress and Convention Association. Multi-Media Design Centres. Both fDi is strongly associated with the health indices weight a city’s performance of populations in both developed and 70% based on the quality of the developing countries). PwC Global location and 30% based on the cost

Cape Town – African city of opportunity 89 Healthcare team adapted methodology Loss Index and the People Risk Index. city’s heat index for each month and from the 2001 report “Comparative This variable measures the economic optimal room temperature and then efficiency of national health systems: and people effect of river and coastal averaging the absolute values of these cross-national econometric analysis”. floods, earthquakes, windstorms, differences. and tsunamis. The economic effect End of life care* Recycled waste is measured by lost GDP output in Ranking of countries according to the immediate aftermath of an event Percentage of municipal solid waste their provision of end-of-life care. The relative to the country’s GDP. The diverted from landfill. This includes, Quality of Death Index by the EIU people effect is both the potential for but is not limited to, recycling and assesses the availability, affordability fatalities and casualties, as well as captures other methods such as waste- and quality of palliative care for people who need to be evacuated and to-energy. adults in 80 countries across the are unable to access their home or Air pollution world. The index scores countries workplace (in the immediate aftermath across 20 indicators grouped in five of an event) as a proportion of the Combination of measures of particulate categories: palliative and healthcare population of the city. The indices matter 10 micrometres (PM10) outdoor environment, human resources, are derived from Swiss Re’s Mind the air pollution levels from the World affordability of care, quality of care risk study (http://www.swissre.com/ Health Organisation (WHO) and the and community engagement. These rethinking/climate_and_natural_ Numbeo Pollution Index of overall indicators are grouped into qualitative disaster_risk/Mind_the_risk.html), pollution in each city. The WHO’s Public and quantitative categories and are results of which are available at CatNet Health and Environment database normalised to form an overall index (http://www.swissre.com/clients/ provides annual mean concentrations score. client_tools/about_catnet.html). of PM10 in diametres or less, reflecting the degree to which urban populations Crime Natural disaster preparedness are exposed to this fine matter. The Weighted combination of Mercer This measure takes into account Numbeo Pollution Index is generated Quality of Living report (2014) crime each city’s disaster preparedness. via survey-based data. Numbeo score (50%); intentional homicide Using a method developed by PwC’s attributes the biggest weight to air rate per 100,000 of the city population actuarial and forensics practice, pollution, then to water pollution/ (30%); and the Numbeo Crime Index each city receives a score based accessibility as the two main pollution (2015), which is an estimation of the on its preparedness. This measure factors. A small weight is given to other overall crime level in each city based on considers whether the city has put in pollution types. how safe citizens feel (20%). place early warning systems, made Public park space Political environment efforts to reduce the underlying risk factors, regularly conducts training Proportion of a city’s land area Measure of a nation’s relationship with drills, and implements strategies designated as public recreational and foreign countries, internal stability, law to increase public awareness. Fifty green spaces to the total land area. enforcement, limitations on personal percent of the score is taken at a Excludes undeveloped rugged terrain freedom and media censorship. Data is country level from the UNISDR’s web or wilderness that is either not easily from the Mercer Quality of Living 2014 platform, PreventionWeb, which has accessible or not conducive to use as reports. collated national progress reports public open space. Security and disease risk on the implementation of the UN’s Water-related business risk 10-year plan to make the world safer An analysis of the potential effects from natural hazards, the Hyogo Water risks in a city related to quality, of crises on economic output in each Framework for Action. Each city’s quantity, and regulatory risk. Quality city, calculated by measuring the average performance in the variables risks are defined as the exposure to percentage of GDP at risk from a series of public transport systems, health changes in water quality that may of individual health and security threats system performance, and operational impact industrial production systems, between 2015 and 2025. The nine risk climate are also factored into the resulting in the need for further threats measured were cyber attack, disaster preparedness measure to make investment or an increase in the market crash, nuclear accident, oil price up the remaining 50%. operational costs of water treatment. shock, sovereign default, terrorism, Risks related to quantity are defined power outage, human pandemic, and Thermal comfort as the exposure to changes in water plant pandemic. Data are taken from A thermal comfort score was created quantity (e.g., droughts or floods) the Lloyd’s City Risk Index 2015–2025 for each city by calculating the that may impact a company’s direct average deviation from optimal room operations, supply chains, and/or temperature (72 degrees Fahrenheit). logistics. Regulatory risk refers to the 5. Sustainability and the natural January, April, July and October unpredictability of regulations within environment heat indices were calculated for the business environment. These risks Natural disaster exposure each city using an online tool that arise when an unexpected change integrates average high temperature in water-related law or regulation A measure of a city’s exposure to and corresponding relative evening increases a business’s operating natural disaster risk, calculated by humidity during each month. A final costs, reduces the attractiveness of an PwC’s actuarial and forensics practice thermal comfort score was derived by investment, or changes its competitive using data from Swiss Re’s CatNet GDP first taking the difference between a landscape. Data produced by the World Resources Institute with Aqueduct. 90 PwC 6. Demographics and Liveability Senior wellbeing* Licensed taxis Entertainment and attractions The Global AgeWatch Index presents Number of officially licensed taxis a unique snapshot of the situation in each city divided by the total Cultural experience from the A.T. of older people in 96 countries. It population and then multiplied by Kearney Global Cities Index is highlights which countries are doing 1,000. measured by the number of diverse best for their older populations and how attractions in a city, including the Major construction activity this links with policies toward pensions, number of major sporting events a health, education, employment, and Major construction activity is composed city hosts; the number of museums, the social environment in which older of three equally weighted measures: performing arts venues, and culinary people live. The overall score takes the number of planned and under establishments; the number of account of income security, capability, construction buildings in the Emporis international travelers; and the number enabling environment, and health database; the number of properties of sister city relationships. status of the over 60s. sold and recorded by Real Capital Quality of living Analytics’ database; and construction YouthfulCities Index employment from Oxford Economics. Score based on more than 30 factors A measure produced by YouthfulCities, The Emporis database is the count across five categories: socio-political a global database that measures, of planned and under construction stability, healthcare, culture and compares, and ranks 55 cities across buildings categorised as a high rise, natural environment, education and 20 urban attributes using a total of 101 skyscraper, low rise, hall, or stadium; infrastructure. Each city receives a indicators. The indicators consist of the number of properties sold is based rating of either acceptable, tolerable, primary and secondary data that Urban on the number of properties valued uncomfortable, undesirable or Decoders (a globally dispersed team at more than $10 million, recorded intolerable for each variable. For of young urban researchers) collect between February and July 2015; and qualitative indicators, ratings are locally and submit using collaborative, construction employment is taken as a awarded based on the Economic cloud-based research workbooks. The percentage of total employment. Intelligence Unit analysts’ and YouthfulCities Index is an ambitious city contributors’ judgments. For Housing collaborative effort to analyse the quantitative indicators, ratings are largest cities around the world from a Measure of availability, diversity, cost calculated based on cities’ relative unique youth perspective to rank them and quality of housing, household performances on a number of external as best suited for young people aged appliances and furniture, as well as data points. Data sourced from the 15–29. It looks at how youth live, work, household maintenance and repair. Economist Intelligence Unit’s Liveability and play in their urban setting in order This measure is based on the Mercer ranking. to examine how cities are serving their Quality of Living report 2014.Tied cities Working age population youth. It asks how youth can be better were differentiated by looking at the annual percentage change in house Proportion of a city’s population aged integrated and engaged in their cities. prices. 15-64 to the total population of the city. Traffic congestion City brand 7. Transportation and Measure of traffic congestion and The Guardian Cities global brand infrastructure congestion policies for each city scored survey measures two aspects of a city’s Mass transit coverage on the level of congestion as well as the brand: its “assets”—attractions, climate, Ratio of kilometres of mass transit track modernity, reliability and efficiency of infrastructure (particularly transport), to every 100 square kilometres of the public transport. Assessment based on safety, and economic prosperity—and developed and developable portions of Mercer Quality of Living reports 2014. its “buzz,” a combination of social a city’s land area. A city’s developable Tied cities were differentiated using the media (Facebook likes and Twitter land area is derived by subtracting ease of commute variable. sentiment analysis) and media green space and governmentally mentions. The assets and buzz elements Ease of commute protected natural areas from total land were both given a score out of 10; the area. PwC employees in each of the 30 offices numbers were then added to produce a were asked “On a scale from 1 to 10, total score. Affordability of public transport where 1 is difficult and 10 is easy, Relocation attractiveness The affordability of the longest mass please rate your commute to work?”. transit rail trip from a city’s boundary Data provided by the PwC employee PwC employees in each of the firms’ to the CBD, calculated by using a city’s survey conducted for the ‘We, the offices in the 30 cities were asked average hourly wage (UBS Prices Urban People’ study. “Based on the other 29 cities in Cities and Earnings 2015) to determine the of Opportunity, please rank the top amount of time a citizen needs to work three cities that you would like to work to be able to buy a single ticket. The in most?” Data provided by the PwC cost of a bus trip is used in cities where employee survey conducted for the ‘We, there are no rail systems. the Urban People’ study.

Cape Town – African city of opportunity 91 8. Economic Clout 9. Ease of doing business for self-dealing” and “shareholders’ ability to sue officers and directors Number of Global 500 Ease of starting a business** for misconduct.” Assessment scores headquarters Assessment of the bureaucratic and gathered from Doing Business 2015, legal hurdles an entrepreneur must Number of Global 500 headquarters The World Bank Group. overcome to incorporate and register a located in each city, as per the Fortune Operational risk climate* new firm. Accounts for the number of Global 500 list. procedures required to register a firm; Quantitative assessment of the risks Employment growth the amount of time in days required to to business profitability in each of the 2014-2016 percentage growth rate of register a firm; the cost (as a percentage countries. Assessment accounts for employment in the city. Data provided of per capita income) of official fees present conditions and expectations by Oxford Economics. and fees for legally mandated legal or for the coming two years. The professional services; and the minimum operational risk model considers 10 Financial and business services amount of capital (as a percentage of separate risk criteria: security, political employment per capita income) that an entrepreneur stability, government effectiveness, The number of jobs in financial and must deposit in a bank or with a legal and regulatory environment, business services activity as a share notary before registration and up to macroeconomic risks, foreign trade of total employment in the city. three months following incorporation. and payment issues, labor markets, Financial services include banking Assessment scores gathered from Doing financial risks, tax policy, standard of and finance, insurance and pension Business 2015 report, The World Bank local infrastructure. The model uses funding, and activities auxiliary to Group. U.S. cities were differentiated 66 variables, of which about one-third financial intermediation. Business from each other using the United States are quantitative. Data produced by services include a mix of activities Small Business Friendliness 2013 Small Economist Intelligence Unit’s Risk across the following sub-sectors: Business Survey by Thumbtack.com in Briefing. partnership with Kauffman Foundation. real estate and renting activities, Workforce management risk IT and computer related, R&D, Resolving insolvency** architectural, engineering and other Ranking based on staffing risk in each technical activities, legal, accounting, This topic identifies weaknesses in city associated with recruitment, bookkeeping and auditing activities, existing bankruptcy law and the employment, restructuring, retirement tax and consultancy, advertising, and main procedural and administrative and retrenchment. Risk was assessed professional scientific and technical bottlenecks in the bankruptcy process. based on 30 factors grouped into five services and business services where Assessment scores gathered from Doing indicator areas: demographic risks not elsewhere classified. Data provided Business 2015, The World Bank Group. associated with labor supply, the economy and the society; risks related by Oxford Economics. Ease of entry: Number of countries to governmental policies that help or with visa waiver * Attracting FDI hinder the management of people; Combined variable ranking the number Number of nationalities able to enter education risk factors associated of greenfield (new job-creating) the country for a tourist or business with finding qualified professionals projects, plus the total US$ value of visit without a visa. Excludes those in a given city; talent development greenfield capital investment activities nationalities for whom only those risk factors related to the quality and in a city that are funded by foreign with biometric, diplomatic or official availability of recruiting and training direct investment (FDI). Data cover passports may enter without a visa. resources; and risks associated with the period from January 2005 through Number of foreign embassies and employment practices. A lower score December 2014 provided by fDi consulates indicates a lower degree of overall Intelligence. staffing risk. Rank scores sourced from Number of countries that are the 2013 People Risk Index produced Productivity represented by a consulate, embassy, by Aon Consulting. high commission, depute high Productivity is calculated by dividing Tax efficiency the gross domestic product (GDP) commission or representative office in 2015 US dollars by employment in each city. Figures sourced from Combination of the number of tax in the city. Data provided by Oxford Embassypages.com payments and the time required to Economics. Level of minority shareholder comply by businesses during their protection** second year of operation. The tax Rate of real GDP growth payments element reflects the total 2014-2016 gross domestic product Measurement of the strength of number of taxes and contributions paid, (GDP) percentage growth rate in real minority shareholder protection against the method of payment, the frequency terms expressed in 2015 US$. Data misuse of corporate assets by directors of payment, the frequency of filing, and provided by Oxford economics. for their personal gain. The Strength the number of agencies involved for the of the Investor Protection Index is case-study company. Time to comply the average of indices that measure measures the time taken to prepare, “transparency of transactions,” “liability file, and pay three major types of taxes

92 PwC (corporate income taxes, value-added Purchasing Power taxes, and labor taxes). Data provided Domestic purchasing power is by PwC UK from Paying Taxes 2016; measured by an index of net hourly taxes are accurate for the year ended 31 wages (where New York = 100) December 2014. The Paying Taxes 2016 excluding rent prices. Net hourly wages report can be found at http://www. divided by the cost of the entire basket pwc.com/gx/en/paying-taxes/. of goods and services excluding rent. The basket of goods relates to 122 goods and services. Data sourced from 10. Cost UBS Prices and Earnings 2015. Corporate total tax rate Affordability of rent The corporate total tax rate measures A measure of the affordability of rental the amount of taxes and mandatory accommodation in a city, calculated contributions payable by the businesses by offsetting the monthly rental in the second year of operation, cost of a 120m² apartment against a expressed as a share of commercial city’s average wages (UBS Prices and profits. The corporate total tax rate is Earnings 2015). Rental prices were designed to provide a comprehensive sourced from the Global Property Guide measure of the cost of all the taxes a – where the cost of a 120m² apartment business bears. Data provided by PwC was not available, the closest equivalent UK from Paying Taxes 2016; taxes was used. are accurate for the year ended 31 December 2014. Some cities that were not included in the Paying Taxes 2016 study were calculated separately by our PwC local office using the through-the- cycle methodology. The Paying Taxes 2016 report can be found at http:// www.pwc.com/gx/en/paying-taxes/. Personal tax The personal tax data reflect the average employee effective tax rate across manager, assistant, and support staff levels in each city economy. The employee effective tax rates were generated by PwC UK using data supplied for Paying Taxes 2016. Taxes are accurate for year ended 31 December 2014. The Paying Taxes 2016 report can be found at http://www. pwc.com/gx/en/paying-taxes/. Cost of business occupancy Annual gross rent divided by square feet of Class A office space. Gross rent includes lease rates, property taxes, maintenance and management costs. Data produced by CBRE Global Office Rents in US$. Cost of Living A relative measure of the price of consumer goods by location, including groceries, restaurants, transportation and utilities. The CPI measure does not include accommodation expenses such as rent or mortgage. Figures provided by Numbeo.

Cape Town – African city of opportunity 93 Appendix B

Restrictions

This publication has been prepared based on it. Accordingly, regardless of solely for the purpose stated herein the form of action, whether in contract, and should not be relied upon for any tort (including without limitation, other purpose. This document does negligence) or otherwise, and to the not constitute professional advice and extent permitted by law, PwC accepts for the implications, we have relied no liability of any kind to any third upon, and assumed the accuracy party and disclaims all responsibility and completeness of, all information for the consequences of any third party available to us from public sources. acting or refraining to act in reliance We have evaluated this information on the information. The document has through analysis, inquiry and review been prepared with care and diligence but have not sought to verify the and the statements and opinions within accuracy or completeness of any it are given in good faith and the belief such information. It should not be on reasonable grounds that such construed that we have conducted statements and opinions are not false an audit of the information we or misleading. No responsibility arising have used. You should not act upon in any way for errors or omissions the information contained in this (including responsibility to any person publication without obtaining specific for negligence) is assumed by us or professional advice. Our engagement any of our partners or employees did not constitute a statutory audit (the for the preparation of the document objective of which is the expression of to the extent that such errors or an opinion on financial statements) omissions result from our reasonable or an examination (the objective of reliance on information provided by which is the expression of an opinion others or assumptions disclosed in the on management’s assertions). No document or assumptions reasonably republication or warranty (express or taken as implicit. We reserve the right, implied) is given as to the accuracy but are under no obligation, to re or completeness of the information revise or amend the document if any contained in this publication, and, to additional information (particularly the fullest extent permitted by law, as regards the assumptions we have PwC, its members, employees and relied upon) which exist at the date of agents do not accept or assume any this document, but was not drawn to liability, responsibility or duty of care our attention during its preparation, for any consequences of you or anyone subsequently comes to light. else acting, or refraining to act, in reliance on the information contained in this publication or for any decision

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